Vedro Imanuel G, Jakarta – An economist from Paramadina University, Didin S. Damanhuri, said the manufacturing industry sector in Indonesia is experiencing a significant drop, especially when compared to the New Order era. According to Didin, this decline is drawn by comparing industrial growth and the country's economic growth.
"During this Reform era, the manufacturing industry experiences a significant drop," said Didin in a discussion event on Sunday, September 22, 2024.
Didin explained that during Soeharto's reign, industrial growth far exceeded economic growth. At that time, according to him, manufacturing industry growth could reach around 12 or 14 percent with 7 to 8 percent economic growth.
"Meanwhile, the average economic growth during this Reform era was 5 percent. Industrial growth was just below 5 percent at around 4 percent," he said.
According to Didin, the current state of industrial growth signifies an industrial decline that will lead to the informalization of the economy. This occurs when people are forced to work in the informal sector.
"60-70 percent of our workforce are in the informal sector," said Didin. According to Didin, this economic informalization is evidence of poor labor absorption, which was comparably higher during the New Order regime. Therefore, Didin said a good industrial policy is necessary, where industrial planning is utilized consistently with existing policies.