There Are 1,641 Factory Construction Process Companies, Will Absorb 3.05 Million Workers

JAKARTA - The Ministry of Industry noted that 1,641 companies are building new production facilities with an investment value of Rp803.2 trillion. This is based on data from the National Industrial Information System (SIINAs) until the first semester of 2025.

The workforce absorbed in the newly built industry is estimated at 3.05 million people.

Spokesperson for the Ministry of Industry, Febri Hendri Antoni Arif, assessed that this figure is clearly far greater than the number of Termination of Work Relations (PHK) submitted by other ministries or employers' associations.

Febri also firmly denied the allegation that the storm of layoffs was still happening in the manufacturing industry sector. According to him, the issue of layoffs must be viewed proportionally, supported by accurate data and analysis and a more comprehensive explanation.

"This data proves that the national manufacturing sector is not experiencing a contraction as revealed to the public, but continues to grow with the presence of new production facilities by absorbing even greater labor," said Febri in his official statement, Tuesday, July 29.

Then, manufacturing production in June 2025 also showed expansive performance. Based on the Industrial Trust Index (IKI) of the Ministry of Industry, the value of IKI in June 2025 was recorded at 52.50. This means that industry players stated that their performance was better than the previous month and the absorption of their workforce.

Export-oriented industrial performance and the domestic market are also expansive, shown by each export IKI at 52.19 and the domestic sector 51.32.

The expansion of three manufacturing performance indicators indicates the demand, production and absorption of manufacturing industry labor at a better level than in the previous months.

Furthermore, Febri is optimistic that later labor absorption in the industrial sector, especially labor-intensive industries, will continue to increase. This optimism is supported by four things:

First, the government has issued a revised import relaxation policy or Permendag 8 of 2024. Although the policy is valid within the next two months, its enthusiasm has been captured by domestic industries, especially domestic market-oriented industries.

The policy is expected to control the volume of cheap imported products to the domestic market and again boost production utilization and employment, especially in labor-intensive industries.

Second, the Ministry of Industry has completed the harmonization process between ministries related to the Draft Minister of Industry's Labor Intensive Credit (KIPK). The Minister of Industry will be issued in conjunction with the Minister of Finance Regulation (PMK) which is also still in process.

With this Permenperin, around 2,722 labor-intensive industrial companies are likely to be able to enjoy incentives and help them refrain from layoffs on their workforce, increase production utilization and product competitiveness.

Third, the impact of the two historic trade agreements recorded by President Prabowo Subianto, namely the Indonesia-American trade agreement and the Indonesia-EU trade agreement. The two trade agreements are believed to have stimulated domestic industries, especially export-oriented industries.

The Ministry of Industry has also received reports from several domestic industries that were previously domestically oriented to start directing their products to the American and European Union markets after the signing of the trade agreement.

The increasing demand for exports and production utilization after the trade agreement is believed to protect industrial workers from layoffs and also absorb more labor.

"We are also optimistic that the completion of the Indonesia-American and Indonesia-European Union Comprehensive Economic Partnership Agreement (IEU-CEPA) trade agreement will open up greater opportunities for Indonesia's export industry to the European market. Not only the export industry, domestic market-oriented industries are also starting to be interested in exporting their products into the American and European Union markets," explained Febri.

According to Febri, the agreement is a breath of fresh air for industries that previously had difficulty penetrating the European market and would expand production capacity, maintain workers and even absorb even more new workers.

Fourth, the Ministry of Industry will increase the demand for manufacturing products to meet government needs through reform of TKDN governance. This reform will make the TKDN calculation process easier, faster and more efficient.

The high TKDN score will increase the accessibility of domestic products in government spending, strengthen local industry demand, increase production utilization and absorb more labor.

Currently, it is estimated that around 3.2 million Indonesians are working on the domestic industry that supplies the needs of this government. With TKDN policy reform, it is hoped that the workforce is absorbed through government spending on domestic products can rise higher.

"We believe, with these various strategic policies, the national industrial sector will remain the locomotive of economic growth and job creation. The narrative of the layoff storm attached to the manufacturing industry does not describe the entire dynamics of the industry which is currently expanding," he concluded.