Global Manufacturing Investment Continues To Rise Outside Java, Drives Economic Growth

Minister of Industry Agus Gumiwang Kartasasmita (Photo: Antara)

JAKARTA - Minister of Industry (Menperin) Agus Gumiwang Kartasasmita emphasized that the direction of national investment in 2026 will increasingly rely on the manufacturing industry sector, along with the shift in foreign investment structures (PMA), which are now increasingly dominant in entering the secondary sector.

This shift is considered to be an important foundation for strengthening the industrial structure and accelerating industrialization which is the government's priority.

"The latest data shows that foreign investment flows are now increasingly leading to manufacturing industries, such as metals, chemicals, machines and electronics. This proves that the industrialization policy implemented by President Prabowo has been running on the right track and is increasingly attracting global investors to invest in the manufacturing sector. Indonesia," Agus said in his official statement, quoted Wednesday, November 26.

Based on BRI Danareksa Sekuritas research, the role of the manufacturing industry sector in the Indonesian economy is getting stronger in the first year of President Prabowo Subianto's administration.

This can be seen from the data on the composition of PMA until the third quarter of 2025 which was dominated by the manufacturing industry sector.

BRI Danareksa Sekuritas' research revealed that the composition of PMA to the secondary sector continued to increase significantly, from 35.3 percent in 2018 to 59.6 percent during January-September 2025.

This increase is in line with the matureness of the industrialization ecosystem in Indonesia, which proves that added value activity no longer relies on the extraction of raw materials, but on industrial cluster-based processing in various regions.

Agus assessed that this strategic step was a positive signal for the expansion and distribution of the center of economic growth in Indonesia.

"We see the acceleration of industrialization in the areas of Sulawesi, Maluku, Kalimantan and other regions. The government is committed to continuing to maintain this good momentum so that equitable development is more optimal," he said.

According to BRI Danareksa Sekuritas research, each PMA worth IDR 1 trillion outside Java produces an additional Gross Fixed Capital Planting (PMTB) of around IDR 1.76 trillion.

"This multiplier effect is very large for the national economy, especially for areas outside Java," he said.

As a comparison, PMA worth IDR 1 trillion in Java only resulted in an additional PMTB worth IDR 140 billion.

The same report also states that PMA outside Java has a greater multiplier impact on PMTB than other regions. This is because the need for higher capital is at the same time accelerating the development of new industrial clusters in the region.

The former Minister of Social Affairs emphasized that the government will continue to raise confidence from industry players by creating a conducive business climate.

"We understand that corporations are still waiting for stronger demand visibility. Therefore, the Ministry of Industry is preparing various incentives and convenience in the industry so that investment expansion can increase again in the next few quarters," explained Agus.

With the stronger flow of PMA to the manufacturing industry sector and the development of industrial centers outside Java, the government ensures that it will continue policies that support a healthy and competitive investment climate.

"We are committed to ensuring that Indonesia remains the main goal of manufacturing investment in Asia. Industrial transformation, improvement of labor quality and high-value industrial development will continue to be the government's priority to strengthen the upstream-intermediate-hilir industrial ecosystem," he explained.

Meanwhile, BRI's Chief of Economist and Head of Fixed Income Research Danareksa Sekuritas Helmy Kristanto said that the dominance of the manufacturing sector had a positive impact on improving and equitable welfare.

According to him, PMA in the manufacturing sector creates a very strong multiplier effect outside Java.

"PMA, which is dominated by the manufacturing sector as the supporter of investment growth, increases PMTB and expands regional benefits, with areas outside Java benefiting the most," he said.

Regionally, he continued, PMA outside Java produced much greater PMTB. This reflects the deeper need for capital and reinforces the role of PMA in supporting geographically more balanced growth.

"There are several key factors that need to be considered to strengthen investment momentum. These include the capital expenditure cycle, the level of utilization of industrial capacity and growth of the minimum wage," he added.