Important Industrialization Strategies that Can Help Improve the Competitiveness of Leading Industrial Sectors

JAKARTA – The Ministry of National Development Planning/Bappenas, through the Indonesia Development Forum (IDF), held several online surveys geared towards the participants of the IDF's Inspiring Session Road to IDF webinars on Tuesday (29/6).

Up to 249 respondents took part in the survey, whose responses confirmed the importance of effective industrialization strategies that focus on improving the competitiveness of Indonesia's industrial subsectors.

The results of this survey, of which most of the respondents are aged 20 to 50, will be used as input to help the IDF develop its upcoming Idea Series events. One of the surveys' themes revolved around one of 5 IDF subthemes, which is "Improving the Competitiveness of Leading Subsectors".

The industrial sector is considered to be one of the most important economic sectors in Indonesia due to its ability to generate massive amounts of jobs as well as provide added economic value that will help alleviate the poverty rate. During the Covid-19 pandemic, Statistics Indonesia (BPS) revealed that Indonesia's poverty rate rose to 10.14% of the total population. This condition shows the need for special steps to handle the impacts of the pandemic by stimulating economic activities that are able to provide high added value through industrialization. 

Up to 31.3% of respondents said that improving the industrial sector's competitiveness must be prioritised in order to achieve a larger economic growth rate, and only 7.6% said that Indonesia must not be dependent on imports.

Meanwhile, 33.3% think that it is important to keep economic stability and improve the investment climate to help boost this industrial competitiveness. A similar number of respondents, 30.1%, considered technological readiness and innovation as the main aspect of growth.

Regarding the leading industrial subsectors, a third of respondents (roughly 31.3%) said that utilizing the creative economy is crucial in building competitiveness. Up to 28.1% feel that commodity-based industries must become the forefront of growth. The remaining respondents say that export-oriented industries, labor-intensive industries and high-tech industries are the priorities.

According to around 22.5% of respondents, the competitiveness of commodity-based industries must be maintained and improved by focusing on fixing productivity issues as well as improving the quality of agricultural and marine products. Only 2.4% say that the easiness of exporting and importing need to be prioritized.

Furthermore, regarding the key factors in achieving this competitiveness, more than half of all respondents said that the quality of workers is the most important factor. Others chose technological readiness, collaboration between research & development centers and industries, wage levels, sustainability and improved accessibility to raw materials.

On the question of policy support that is most needed in increasing competitiveness, innovation and R&D ranks at the top, selected by 25.3%, followed by the implementation of the Job Creation Act, selected by 22.5%.

Increasing competitiveness is a must when talking about global competition. All countries are competing to improve their competence in sectors that have comparative advantages and are preparing strategies to take positions in global supply chains.

To become truly competitive, the supply side of production is a determining factor for productivity increase. Labor, capital, technology, raw materials, energy and various other input factors, as well as policies that support efficiency need to be seriously prepared to reduce production costs and create quality results to ensure higher competitiveness.