JAKARTA, KOMPAS — Around 1.2 million new manufacturing businesses were established in the 2006-2016 period, but they only absorbed 4 million workers. That means each business employs an average of 3-4 workers.
“That’s just normal, because 99.03 percent of the manufacturing industry are micro businesses. Meanwhile, medium and big businesses only account for 0.97 percent,” Central Statistics Bureau (BPS) distribution statistic director Anggoro Dwitjahyono said in Jakarta on Friday (28/4). The number of workers at small and micro businesses in the manufacturing industry is roughly two. Meanwhile, medium and big businesses typically employ 157 workers each.
Based on the 2016 BPS Economic Census, the manufacturing industry in 2016 comprised 4.42 million businesses, with the number of workers standing at 15.99 million.
Institute for Development of Economics and Finance director Enny Sri Hartati said growth in the manufacturing industry was not very strong. Thus, the absorption of workers was not significant.
Therefore, Enny said, the manufacturing industry needed to be improved immediately. Otherwise, Indonesia would fall into the medium-income countries trap. This is because growing consumption cannot be met through domestic supply. The demographic bonus will be useless, because the industry cannot absorb the workforce.
National Development Planning Agency head Bambang PS Brodjonegoro said the 2018 Government Work Plan prioritized the manufacturing industry to drive economic growth and absorb workers. “We want to drive the portion of the manufacturing industry to 20 percent of the gross domestic product. Currently, it hovers around 15-16 percent,” Bambang said.
The role of the manufacturing industry for the gross domestic product has declined over the past decade. This was because Indonesia let imported products enter the domestic market too easily, particularly products from China that are more competitive than domestic products, Bambang said.
Thus, Bambang added, the government was pushing for investment in the manufacturing industry. Lately, such investment isnot only going to the labor-intensive sector but increasingly to capital-intensive businesses. In response to this situation, production chains involving small and medium businesses need to be developed.
(LAS)
