Jakarta, INTI - The Chemical, Pharmaceutical, and Textile Industries (IKFT) in Indonesia have proven to be a resilient and vital force within the national economy, recording a cumulative growth of 4.2% by the third quarter of 2024. This remarkable achievement underscores the sector's critical role in supporting the manufacturing industry and contributing significantly to Indonesia's economic performance.

Acting Director General of IKFT at the Ministry of Industry, Reni Yanita, highlighted the sector's substantial impact during the "Outlook of the Chemical, Pharmaceutical, and Textile Industries for 2025" event held in Yogyakarta on December 17, 2024. She stated, "The IKFT sector continues to provide a significant contribution to the performance of the non-oil and gas processing industry as well as to the national Gross Domestic Product (GDP), accounting for 22.46% of the non-oil and gas industry and 3.87% of the GDP in the third quarter of 2024."

Subsector Achievements

The robust performance of IKFT is backed by impressive growth in several subsectors. According to year-on-year (YoY) data from the Central Statistics Agency (BPS), the leather, leather goods, and footwear industries demonstrated the most remarkable growth, expanding by 10.15% in the third quarter of 2024. This figure represents a significant leap from the 5.90% growth in the first quarter and the 1.93% growth in the second quarter of 2024. Moreover, this marks a drastic improvement compared to the contraction of 2.96% in the same period in 2023.

Similarly, the textile and apparel industry showed positive progress, recording a YoY growth of 7.43% in the third quarter of 2024. This was a notable increase from its previous performance, which saw a 2.64% growth in the first quarter, a slight decline of -0.03% in the second quarter, and a contraction of -2.96% in the same quarter of 2023.

Other subsectors, such as rubber, rubber goods, and plastics, also posted significant improvements with a growth rate of 3.46% in the third quarter of 2024, reversing earlier declines in the first quarter (-5.24%) and showing gradual improvement in the second quarter (2.13%). Meanwhile, the chemical, pharmaceutical, and traditional medicine industries achieved a growth rate of 3.08% in the same period.

Challenges in a Globalized Economy

Despite these achievements, Reni Yanita acknowledged the challenges faced by the IKFT sector. "Although the sector's macro performance has been positive, several challenges persist, such as global economic and political instability, the heavy influx of imported finished products, and regulatory frameworks that are not yet fully supportive of domestic industries," she explained.

Addressing these issues remains a priority for the Ministry of Industry, which is working diligently to bolster the manufacturing sector, including IKFT, to ensure it continues to serve as a cornerstone of Indonesia's economic resilience.

Strategic Measures for Sustained Growth

The Ministry of Industry has implemented various strategic measures to support the growth of IKFT, including controlling imports of finished products, increasing exports, ensuring the availability of raw materials and energy for domestic industries, and optimizing industrial utilization rates. Additionally, policies favoring the industrial sector are deemed essential to achieving the targets outlined in Indonesia's Long-Term Development Plan (RPJPN) for 2025–2029.

One of the proposed measures includes expanding the implementation of specific natural gas prices (HGBT), which plays a vital role in strengthening domestic industries. The Ministry also emphasizes the importance of industrial restructuring, particularly in modernizing machinery and equipment, developing petrochemical industries, and promoting sustainability through decarbonization and the circular economy.

The Roadmap to Economic Transformation

As part of its broader vision for economic transformation, Indonesia aims to be among the top five global economies by 2045. The RPJPN envisions Indonesia as a united, sovereign, advanced, and sustainable nation. To achieve this, the contribution of the manufacturing industry to the national GDP is targeted to reach 28% by 2045.

The roadmap includes four transformative phases from 2025 to 2045. In the first phase (2025–2029), the focus will be on downstreaming natural resources, strengthening research and innovation, and enhancing labor productivity. During this period, the processing industry is expected to account for 21.9% of the national economy.

To meet these ambitious goals, the IKFT sector is projected to grow by 6.59% in 2025, 7.97% in 2027, and 7.59% in 2029. Key subsectors driving this growth include the chemical, pharmaceutical, and traditional medicine industries, with a targeted growth range of 7.98%–9.33%, and the non-metallic mineral goods industry, which aims for growth between 8.36% and 8.74%.

Encouraging Investment and Innovation

Investment remains a critical component of the IKFT sector's success. The Ministry has outlined plans to attract significant investments in petrochemical industries located in strategic areas such as Teluk Bintuni, Tanjung Enim, and Kutai Timur. Additionally, the promotion of investment opportunities in the textile, footwear, and downstream chemical sectors is being actively pursued.

In terms of innovation, the Ministry is focusing on restructuring machinery for the textile, leather, and footwear industries, advancing Industry 4.0 practices, and accelerating decarbonization efforts. Sustainability and circular economy practices are also being implemented across various industries, including textiles, footwear, and plastics.

Strengthening Supply Chains and Market Access

Efforts are underway to enhance supply chain efficiency by strengthening upstream and intermediate industries within the textile and apparel sector. Policies harmonizing tariffs and non-tariff measures across the upstream, intermediate, and downstream segments are being crafted to ensure seamless material flow.

Furthermore, international cooperation forums are being leveraged to promote Indonesian products and expand market access abroad. The Ministry is also focusing on maintaining industrial sustainability through robust standardization and regulatory frameworks.

A Future Built on Collaboration

Reni Yanita expressed optimism for the sector's future, emphasizing that a conducive business environment supported by industry-friendly regulations will be instrumental in sustaining growth. She also called for collaborative efforts between government agencies, private sectors, and stakeholders to realize the full potential of IKFT as a driving force for Indonesia's economic advancement.

The IKFT sector's impressive performance highlights its vital role in Indonesia's economic landscape. With strategic initiatives, targeted investments, and a focus on innovation and sustainability, the sector is poised to continue its upward trajectory, contributing to the broader vision of making Indonesia a global economic powerhouse by 2045.

• Transformation
• Indonesia
• Investment
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