Alif Ilham Fajriadi, Jakarta – Indonesian Minister of Industry Agus Gumiwang Kartasasmita stated that the manufacturing industry grew by 4.94 percent from the fourth quarter of 2024 to the second quarter of 2025. Meanwhile, the contribution of the manufacturing sector to the Gross Domestic Product (GDP) during that period reached 17.24 percent.

"The manufacturing sector remains expansive and maintains its role as the backbone of the national economy," said Agus during a press conference in Jakarta on Monday, October 20, 2025.

Agus mentioned that the performance of the manufacturing sector during the first year of President Prabowo Subianto's administration showed positive results amid global geoeconomic and geopolitical challenges.

The investment from the manufacturing sector in the past year reached Rp568.4 trillion, equivalent to 40.72 percent of the total national investment. According to Agus, this figure created 19.44 million workforce absorptions, or 13.41 percent of the total national workforce absorptions.

Although the performance of the manufacturing industry and investment in this sector recorded positive achievements, Agus revealed that Indonesia's export value is still lower than that of neighboring countries such as Malaysia, Vietnam, and Thailand. However, Agus considered this as not a sign of a decline in the manufacturing sector in the country.

Agus explained that the low export value of Indonesian manufacturing is not due to a lack of competitiveness. According to him, Indonesian-manufactured products are more widely circulated in the domestic market than overseas. The comparison is 25 percent for exports and 75 percent for the domestic market.

Previously, the global rating agency Standard & Poor's Global Ratings (S&P) reported that Indonesia's Purchasing Manager's Index (PMI) for the manufacturing sector in September 2025 was in the expansion zone. However, its growth rate has slowed down.

S&P reported that Indonesia's manufacturing score in September 2025 stood at 50.4. "The main index figure dropped from 51.5 in August, indicating a slower growth rate," as stated in S&P Global's press release on Wednesday, October 1, 2025.

The latest survey shows continuous expansion in new order receipts at the end of the third quarter of 2025. This increase is the second in two consecutive months, but slower than the previous month.

Businesses noted an increase in demand driven by the domestic economy. Meanwhile, exports declined amid weak foreign demand. The decrease in foreign sales is the second in the last three months. Although demand continues to grow, the production level decreased again in September. Production output fell for the fifth time in the last six months.

Economist at S&P Global Market Intelligence, Usamah Bhatti, said that the expansion of Indonesia's manufacturing in September, driven by a sustained increase in new order flows. However, there was a decline in production volume. "Because companies recorded weaker customer purchasing power," he said.

The survey also mentioned that the business world believes that stronger demand will continue for the next year. Along with an increase in employment levels to the highest level since May. Confidence in the prospect of production output for the next 12 months has also strengthened to the highest position in four months.

– Ilona Estherina contributed to the writing of this article

Source: https://en.tempo.co/read/2058760/indonesias-manufacturing-industry-grows-4-94-says-ministe