Indonesia's consistent economic growth is impressive. One of the key drivers behind this trend is the rapid development of various production sectors, with goods being exported abroad or sold domestically. In this article, we’ll take a closer look at what is produced in Indonesia and what foreign entrepreneurs and investors should pay attention to if they plan to start a business in Indonesia or invest in its economy.
This sector makes a significant contribution to Indonesia’s GDP—approximately 15%—and is one of the main sources of export income. The country is rich in natural resources, including coal, oil and gas, various metal ores, copper, gold, and silver.
Indonesia is well-known for its agricultural output. The government continues to allocate a substantial portion of its budget to support the agricultural sector. Since the 1980s, the country has been self-sufficient in the production of:
1. Rice – the staple food for the majority of Indonesians. Indonesia ranks 3rd in the world for rice production, following China and India.
2. Coffee – one of the world’s top five coffee-producing countries. Annually, Indonesia produces between 400,000 and 700,000 tons, with the majority being Robusta (90%) and a smaller portion Arabica (10%).
3. Palm oil – Indonesia is the global leader in palm oil production. In 2023, output was estimated at around 50 million metric tons.
Other major agricultural products include cocoa, sugar, tea, tobacco, spices, and more.
Despite being an archipelago surrounded by ocean, the marine industry contributes less to GDP than agriculture. However, President Prabowo Subianto has acknowledged its potential and allocated resources to transform Indonesia into a leading global marine hub.
This sector is one of the fastest-growing in Indonesia. The country manufactures:
1. Cars and automotive components
Major international brands have established factories here, including Toyota, Astra, Honda, Nissan, Hyundai, and Volkswagen. Experts believe Indonesia may soon surpass Thailand in production volume.
2. Motorcycles and scooters
These are not only exported but also widely used for personal transport across the country.
3. Machinery and equipment
These include heavy equipment for agriculture, freight handling, construction, mining, etc.
Developing this sector is a strategic priority for the Indonesian government. Attractive incentives were introduced for major global manufacturers. Companies like Toshiba, Sharp, LG, and Samsung have opened factories here. As a result, Indonesia now produces a range of electronics for export — including appliances, consumer electronics, gadgets, and telecommunication cables.
Thanks to quality materials and low labor costs, Indonesia's textile products are in high demand. The export of fibers, yarn, fabrics, and garments forms a significant part of the national economy. One unique element is batik — a traditional Indonesian method of textile painting. Genuine batik is only produced in Indonesia and is globally recognized as a symbol of the country’s cultural heritage.
Despite positive progress, Indonesian manufacturers face several challenges:
1. Environmental concerns
Intensive use of natural resources takes a toll on the environment. Water and air pollution, waste management, and high water consumption require financial investment and modernization of outdated production practices.
2. Skilled labor shortage
Although the country has a large labor force, there's a lack of qualified professionals—especially in high-tech industries.
3. Regional competition
Indonesia competes with neighboring Southeast Asian countries. For example, Thailand currently leads in automotive production, and Vietnam is another major competitor across several manufacturing sectors.
Indonesia’s production industries are diverse and hold significant potential. The government continues working on improving product quality and expanding export markets, strengthening Indonesia’s global standing. Foreign investment is helping accelerate this growth. That’s why the Indonesian government offers favorable conditions for foreign entrepreneurs to open a business in Bali, Jakarta, Surabaya, or any other region.
If you’re considering expanding your business or investing in Indonesia, contact us. At Good Luck Group, we assist entrepreneurs with company registration, bank account setup, sourcing reliable suppliers and distributors, and much more. Let’s start planning your business growth in Indonesia today!
