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Indonesia’s manufacturing industry has scored below the ASEAN average for productivity, a new survey by the Japan External Trade Organization (JETRO) has revealed. At the same time, within Southeast Asia, Thailand earned a spot between Singapore and Vietnam.
Indonesia scored 74.4 while Thailand scored 80.1; The Philippines, Singapore, Vietnam, Laos and Malaysia scored 86.3, 82.7, 80.0, 76.7 and 76.2 respectively.
Human Resources Online reached out exclusively to Wataru Ueno, Senior Director (ASEAN), JETRO, who shared that the biggest problem he believes Indonesia’s industry sector faces is that it is less competitive Thailand and Vietnam.
He explained: “Indonesia’s export depended heavily on natural resources like palm oil or gas in the first decade of the 2000s. So, the manufacturing sector (capital intensive sector) did not develop.”
Apart from this, he also shared that due to the ASEAN-China Free Trade Agreement in 2010, many industrial products were exported to Indonesia and so, the country’s private sector invested in the resources sector instead of the manufacturing sector, to avoid competing with China.
On the labour front, human resources was another key factor, according to Ueno, as the number of engineers available in the country was smaller. He cited a 2018 report, which found that the country still lagged behind in human resource development.
Photo / iStock