Indonesia Advanced Manufacturing - Industry - Market, Share and Trends 2023-2028

Summary of Advanced Manufacturing

Indonesia is just beginning to build capabilities in advanced manufacturing, with most industrial production still in basic manufacturing. The government has launched supportive initiatives around “Making Indonesia 4.0” strategy which is inclusive of an $8B investment fund.

This is driven by abundant labor and resources that could enable Indonesia to become a manufacturing hub. However— the country still lacks technical and engineering talent, high-tech materials and components production and digital infrastructure.

According to our estimates – we can say that the advanced manufacturing industry in Indonesia is forecasted to be a $ 8 Billion industry in 2029 from $ 5.04 Billion in 2023 with a CAGR of 8 %.

Additionally— Indonesia possesses advantages like political stability, rising incomes and access to growth markets that lend well to manufacturing development. If skills development and infrastructure upgrades accelerate, Indonesia could emulate the export-oriented industrialization of Asian peers within the next decade by utilizing these structural strengths.

Recent Trends and Insights

Indonesia is attracting some manufacturing relocation from China focused on lower-tier products not requiring advanced techniques. Some progress is visible around digital supply chain tracking systems, manufacturing execution systems and basic automation. However most production remains human-driven without intelligence technologies integration.

Multinationals like Toyota, GE and Airbus are also building fledgling Indonesian operations to supply regional markets. Their Industry 4.0 knowledge transfer and local partnerships provide positive signals. However—widespread smart manufacturing adoption still remains years away until infrastructure and components production scales up.

The manufacturing industry in Indonesia accounts for about 19.1% of the country’s GDP and 40.2% of all investments. According to a recent analysis – digitalization in Indonesia’s industrial sector may boost the country’s GDP by a substantial amount.

Government Regulation No. 78/2019 on tax allowance is one of the incentives that the government has released as part of its commitment to creating a favourable business environment. Furthermore— the National Medium-Term Plan (RPJMN) 2020–2024 of the nation lists Industry 4.0 as a major initiative with an anticipated financial demand of IDR 245.8T (~USD 17.6 billion).

Product Insights

Indonesia’s current manufacturing base involves mainly resource extraction and basic production like food processing or textile assembly. Advanced techniques like industrial automation, 3D printing or digital supply chain integration remain largely absent.

Some progress is happening in areas like – vehicle assembly where Toyota and Mitsubishi operate – utilizing regional exports demand. Multinationals also provide a knowledge transfer conduit. However— widespread adoption of smart manufacturing is still years away until supporting infrastructure and components production ecosystems mature.

Plenty analysis of the revolution in this industry leads us to project that “robots” can replace 6 workers and one robot per thousand workers can reduce wages by 0.5%. Based on other market intelligence data points – firms utilizing robotics have higher labor productivity but there was unclear evidence on labor displacement.

The expanding middle class in Indonesia is a target market for foreign businesses as it is expected to increase dramatically in the upcoming years. Up to 75 million more people are expected to join the middle class between 2020 and 2030.

Digital banking and e-commerce are two of the most promising sectors with lots of growth potential. Early investors stand to gain from deeper market understanding as well as from developing important local networks.

Key companies

Some major players within this vast domain of industry are:

• PT Akasha Wira International Tbk
• PT Asiaplast Industries Tbk
• PT Akebono Brake Astra Indonesia
• PT Astra Honda Motor
• PT Yamaha Indonesia Motor Manufacturing
• PT Komatsu Indonesia
• PT Hitachi Construction Machinery Indonesia
• PT Schneider Electric Manufacturing Batam
• PT Siemens Indonesia
• PT Fanuc Indonesia

Country Analysis

Indonesia’s infrastructure is pretty average by global standards, something that hampers investments and growth. The president, Joko “Jokowi” Widodo, has been referred to as “The Infrastructure President” due to his substantial goals to improve the infrastructure.

With an increasing population, urbanization and industrialization during the past 20 years, we have witnessed a superior need for infrastructure improvements. From 2020 to 2024 – the government aims to invest a few USD billions in different infrastructure projects – which will benefit both local companies and foreign investors.

Indonesia is notorious for its bureaucracy and red tape which make up for the largwr pictures of investor being away and securing their investments. Due to red tape during the covid epidemic – the country was unable to receive USD 50 billion in fiscal assistance – which is evidence enough.

One of the key reasons Indonesia has not risen in the World Bank’s ease of doing business ranking is red tape. The issue is obviously addressed by the government, and attracting more foreign investors is a priority.

The country struggles with infrastructure issues, red tape and regulations that lean to be unclear and change commonly. To attract more investments, the country must become more transparent and ease the regulations for foreign investors.

Market segmentation

By Type:

• Additive manufacturing/3D printing
• Automation/robotics
• Industrial internet of things (IIoT) and industrial analytics
• Plant asset management (PAM)
• Manufacturing execution systems (MES)
• Industrial controls

By End user:

• Manufacturer and Retailer
• Distinct industries like automotive, aerospace, electronics
• Process industries like oil & gas, chemicals, pharmaceuticals
• Energy and utilities
• Food and beverage

By Enterprise Size:

• Large Industries
• Small & Medium Industries

Our Methodology

We have offered a well-founded review of Indonesia’s advanced manufacturing market along with ongoing trends and upcoming projections to highlight proximate investment opportunities in this report. Moreover, an extensive analysis of any future prospects, challenges, competitors, or navigating aspects is also provided. A methodical detailed regional examination is presented.

Primary Research  

Our multi-pronged research approach includes interviews with industry leaders and a global survey of advanced manufacturing professionals to gain qualitative insights. We utilize our proprietary databases encompassing key performance indicators worldwide in order to collate relevant data points. A multivariate forecasting framework considering historical performance, current dynamics and qualitative factors are utilized to develop market sizing and growth projections through 2029.

We supplement our primary research with a careful examination of secondary materials such as– case studies, news stories and references from other sources. Organizations can benefit from the strategic advice and conclusions offered because they will be better equipped to respond to the dynamic nature of this industry and seize emerging possibilities.

We employ a comprehensive and iterative research methodology focused on minimizing deviation to provide the most accurate market estimates. Our research utilizes a combination of bottom-up and top-down approaches across segments and utilizes databases, primary research insights and industry experts for analysis.

Raw data is obtained from multiple sources and thoroughly filtered to ensure only authenticated and validated sources are considered. We collect data from raw material suppliers, industry associations, technology providers, and buyers to gain a holistic perspective.

Quantitative Analysis

Our market estimates are derived through statistical models, beginning with collection of historical data and analysis of macro- and micro-economic factors influencing the market. Gathered information on market dynamics, technology and pricing trends are utilised to build the models.

Econometric and technological models are applied to project short- and long-term market potential respectively. A bottom-up approach is preferred to minimize errors. Key parameters considered include market drivers and restraints, material pricing trends, regulatory scenarios, and capacity additions.

Weights are assigned to these parameters based on impact analysis and market forecasting is performed via statistical tools and techniques. We believe this methodology results in an accurate and realistic market picture.