The Ministry of Industry continues to work to further improve manufacturing performance in 2024 amid the challenges of global geo-economic and geopolitical impacts, because manufacturing has been the backbone supporting national economic growth.
“Alhamdulillah, manufacturing has been well managed together, so its growth keeps rising. This must be our shared focus and attention going forward,” Minister of Industry Agus Gumiwang Kartasasmita said in Jakarta on Sunday (14/1).
The Minister said the important role of national manufacturing is reflected in its contribution, the largest to national GDP, at 16.83 percent in Q3-2023. In the same period, manufacturing growth reached 5.02 percent, outpacing national economic growth of 4.94 percent.
“Manufacturing is also consistently the largest contributor to our exports. In January–November, manufactured exports still dominated, worth more than USD 171.23 billion,” Agus explained.
Not surprisingly, a safeguardglobal.com report lists Indonesia among the world's top 10 manufacturing contributors, the only ASEAN country on the list. According to the publication, Indonesia contributes 1.4 percent of global manufacturing output. This prestigious position is a significant rise, as four years ago Indonesia was still in 16th place.
With hopes for improving global and national economic conditions, the Minister is optimistic manufacturing will soar further in the Year of the Wood Dragon. “We project non-oil and gas processing industry growth of 4.81 percent in 2023, and have set a target of 5.80 percent for 2024,” he said.
To hit this target, Kemenperin is focusing on various priority programs in 2024, such as competency-based vocational education and training, machinery and/or equipment restructuring for small and medium industries (SMIs), and fostering new entrepreneurs and developing technology-based startup SMIs.
In addition, efforts to increase added value and industrial competitiveness are carried out through the Domestic Component Level (TKDN) certification program and continued downstreaming of natural resources in three sectors: agro-based industry, mining and mineral-based industry, and oil, gas and coal-based industry.
“We will also run the government assistance program for purchasing new two-wheeled battery electric vehicles (KBLBB), develop industrial estates and facilitate green industry certification,” he added. Kemenperin's budget ceiling in the 2024 state budget is IDR 3.76 trillion.
2023 budget realization
The Minister stressed that his side is determined to optimize budget absorption to carry out priority programs for national industrial development. In 2023, Kemenperin's budget ceiling was IDR 4.53 trillion, including an Additional Spending Budget (ABT) of IDR 1.4 trillion for electric motorcycle subsidies.
“Our budget absorption in 2023 was IDR 3.16 trillion. Excluding the electric motorcycle subsidy ABT, realization was 98.3 percent, up from 98.1 percent in 2022,” he said.
The Minister explained that one reason the 2023 electric motorcycle subsidy quota was not met was that subsidy distribution only began in April 2023, and the requirements were simplified only in September 2023.
“On 19 September 2023, the government changed the requirement for KBLBB Purchase Assistance recipients to one Identity Card (KTP) per motorcycle, making it easier and open to all. This change drove a 567 percent increase in purchases,” he said.
Kemenperin notes that the electric motorcycle subsidy program absorbed 11,532 units worth IDR 80.7 billion in 2023, against a target of 200,000 units with a total budget of IDR 1.4 trillion.
The Minister added that one cause of low uptake of the electric motorcycle subsidy relates to the capability of the batteries currently produced. Charging that is considered too slow has dampened public interest in electric motorcycles.
Kemenperin is actively communicating with electric motorcycle manufacturers to set battery standards. “For electric car and motorcycle consumers, the battery is one of the most important things. It must last a long time and be easy to charge. The battery is key to the success of the electric car and motorcycle program,” Agus explained.
Even so, Agus is optimistic that the 2024 electric motorcycle subsidy target can be met, as more products are on the market and consumers have more choice. For 2024, the electric motorcycle purchase program is allocated 50,000 units with a total budget of IDR 350 billion.
Source: Press Release of the Ministry of Industry of the Republic of Indonesia