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Economic 360 Perspective for Indonesia: Growth prospects and Emerging Opportunities in the Manufacturing Industry
Frost & Sullivan, Dec 2010, Pages: 94
The manufacturing industry being a growth driver of the economy contributes 26.1 percent to GDP and is a major source of employment in Indonesia. The government adopted the industrial development plans focusing on the priority industries mainly to revive the economic growth and to transform the manufacturing industry. Competition is expected to rise in the region due to the number of free trade agreements. The existing demand supply gap is largely expected to fuel imports in sectors like industrial machinery, electrical and electronics, chemicals, fertilizers. Investment opportunities are envisaged in the small commercial and hybrid car segment, computers, mobile handsets, agro-based chemicals, convenience and health products.
Research Overview
The manufacturing industry is a significant revenue generator in an economy, efficiently utilising raw materials to produce different value-added products and drive development. The industry not only accelerates economic growth but also stimulates foreign exchange earnings by boosting exports and creates substantial employment opportunities. Changes in this industry have a ripple effect on other sectors such as agriculture and service. The spread of globalisation and inking of various trade agreements have given a huge boost to manufacturing industries around the world. However, this trend, while putting certain indigenous sectors at risk, also makes domestic manufacturing industries vulnerable to global economic changes. In such a scenario, judicious trade, investment and sector-specific policies by the Government will protect the interests of the manufacturing industry and insulate the economy from fluctuations.
To transform Indonesia into an industrialised economy, the Government has adopted short-term (2004-2009) and long-term (2010-2025) industrial development plans. These include signing numerous bilateral trade and investment agreements, implementing favourable policies and offering various sector-specific import duty subsidies/exemptions and export incentives. Higher investment in industries such as chemicals and pharmaceuticals, electronics, motor vehicles and other transport equipment as well as food has hiked the country’s manufacturing output, growth and exports in the last five years. The key manufacturing sectors in Indonesia are automotive, chemicals, electronics, food and beverages, footwear, information and communication technology, oil and gas, pulp and paper, mining, rubber and rubber products and textiles and garments.
During the economic downturn, industries such as food and beverages, tobacco, fertilizers, chemicals, rubber products, transport equipment and machinery showed considerable resilience, whereas textiles, wood, paper, iron, cement and iron and steel were severely affected. To revive the economy, the Government identified priority industries (agro-based, transportation, information and communications technology, basic manufacturing and other small and medium industries) as a part of the long-term development plan. The Government’s opening up of various fields for investment in 2010 attracted revenues to food processing, automotive, rubber, paper, textiles, chemicals and electronics. These efforts seem to have paid off, with Indonesia’s manufacturing industry accounting for more than 26.1 per cent of the gross domestic product (GDP) in 2010, making it the growth engine of the economy.
Economic 360 Perspective for Indonesia: Growth Prospects and Emerging Opportunities in the Manufacturing Industry is Frost & Sullivan’s Country Industry Forecast service, which provides vital inputs for evaluating the attractiveness of a country and its manufacturing industry. Apart from enabling decision makers to assess the impact of non-market forces, it also helps in identifying new market opportunities. This service provides a strong base for preparing contingency plans. In addition, investors can assess industry-specific risk factors as well as conduct a more in-depth micro research.
Benefits
The following benefits are offered by this research:
Identify New Market Opportunities
The trends of the economic environment of Indonesia have been analysed along with their impact on the manufacturing industry. This analysis will provide valuable information to industry participants on opportunities in specific segments of the industry.
Comprehend Future Industry Trends
The research service gives an insight into Indonesia’s manufacturing industry, discusses its dependence on the prevailing economic scenario, and describes the various infrastructure developments in the industry. This will help industry participants to gauge the future direction of the market, enabling them to devise appropriate market strategies to improve market share.
Understand the Economic Environment
A detailed analysis of the economic framework of Indonesia’s manufacturing industry offers insights into the economic parameters, as they exist, and their future direction. This is particularly beneficial in the case of the manufacturing industry, as these economic indicators form an important criterion for industry performance.
Devise Country Entry Strategies
The research service provides valuable information and analysis of the strengths and weaknesses of the economy of Indonesia, which are relevant to the manufacturing industry. This is particularly useful in devising country-specific strategies for industry participants.
Evaluate Industry Segment Potential
This study offers detailed coverage of the economic and infrastructure indicators affecting the industry and their future direction. It provides both country and industry trends and forecasts for major variables and is an excellent tool for companies that plan to enter new geographic markets. This will help corporate planners in developing accurate business plans.
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