Disclosing This Data, the Ministry of Industry Denies There Is Deindustrialization

JAKARTA - The Ministry of Industry (Kemenperin) has denied the assumption that Indonesia is undergoing deindustrialization, following the emergence of a narrative of declining performance of the manufacturing sector against the national economy.

Ministry of Industry spokesman Febri Hendri Antoni Arief emphasized that a number of indicators that are often used as the basis for deindustrialization claims do not fully reflect the actual condition of the current manufacturing industry.

"We deny deindustrialization," Febri said in the IKI April 2026 Release, quoted Thursday, April 30.

Febri said there were several indicators that had been used as a basis for assessing the condition of deindustrialization.

First, the decline in the contribution of the gross domestic product (GDP) of the processing industry to the national GDP.

In fact, based on data from the Central Statistics Agency (BPS), in 2025, the contribution of the processing industry to GDP was recorded at 19.07 percent, showing an increasing trend in recent years.

"If economists or observers take data on the contribution of the processing industry's GDP from 2001 to 2025, the contribution data cannot be compared because the concepts, definitions and methodologies for calculating the processing industry have changed," he said.

For example, in the period 2001-2009, the national GDP was only calculated from nine main business fields, of which the processing industry was one of the nine business fields.

However, from 2010 to 2024, the concept and definition of the processing industry changed and then split into four business fields, namely, first the processing industry itself, the water procurement sector, waste management and recycling, the third information and communication sector, and the fourth other service sectors.

In addition to changing concepts and definitions, the methodology for calculating GDP also changed in 2009.

The methodology for calculating GDP until 2009 is based on producer price calculations, while in 2010 the GDP calculation is based on the base price.

Both changes caused the calculation of the industrial processing GDP to shrink and eventually the percentage of the industrial processing GDP to the national GDP also shrank.

"Due to changes in concepts, definitions and calculation methodologies, the value of GDP and the contribution of the processing industry to GDP decreased from the previous year's calculation. Therefore, it is not apple to apple if we compare the contribution of the processing industry GDP before and after 2009 or during the period of change," said Febri.

Furthermore, Febri explained, when compared to the contribution to GDP in the same period, for example, the period from the first quarter of 2022 to the fourth quarter of 2025, there will be an upward or positive trend in the data on the contribution of the processing industry's GDP to the national GDP.

The increase in contributions was driven by a combination of post-pandemic recovery, the effectiveness of industrial downstream policy, and the strengthening of domestic consumption.

In addition, the policy of downstream processing is considered to have succeeded in increasing the added value of domestic products, while strong domestic demand maintains the stability of the manufacturing sector.

The second indicator used as an excuse for deindustrialization is that manufacturing growth is below 50 percent of national economic growth.

Regarding this, Febri said that manufacturing performance so far is still above the threshold of the deindustrialization indicator.

"With an average national economic growth of around 5 percent, the manufacturing sector is still able to grow in the range of 4 percent to 6 percent. "So there is no indication of these two," he said.

The third indicator is the transfer of labor from industry to the non-manufacturing sector.

In response to this, according to Febri, his party noted that there was no shifting or shifting of labor from the processing industry sector, which numbered 21.6 million people to other sectors such as the service sector.

On the contrary, the number of workers in the industry continues to increase every year.

The increase in labor in the service sector, according to him, is more due to the entry of new labor that not all of it can be absorbed by the manufacturing industry.

"We emphasize that Indonesian manufacturing does not experience early deindustrialization symptoms, let alone deindustrialization," he concluded.