The development in the manufacturing sector during the First Long- Term Development Plan, particularly during the fifth Five-Year Development Plan, showed a significant progress. The industrial growth during the First Long-Term Development Plan reached an annual average of 12.4%, while during the Firth Five-Year Development Plan was 10.2% or surpassing the target of 8.5% set for the said period. During 1993 it grew by 9.4% a slight decrease yet compared to that of 1992 which was 9.7%. It is heartening indeed that the non-oil and non-gas industrial sector in 1993 increased to 11.6% from 11.0% in 1992.

With such growth rate the contribution of industrial sector to the country’s GDP surged rapidly from only 9.2% in 1969 to 22.3% in 1993, topping that of the agricultural sector which was 18.5% in 1993.

Parallels with the changes in the structure of production, there have been also some changes in the structure of employment opportunities from agricultural to industrial and service sectors. During the Fifth Five-Year Development Plan, for instance, the industrial sector absorbed more than 4 million workers, surpassing 2.3 million targeted for the said period. While in 1993 the number of people who got jobs in the sector was 702 thousand. Now the number of those working in the industrial and service sectors has become higher compared to those in the agricultural sector.

Marking the fast growth in the industrial sector are not only the increase of production volume but also the diversification of kinds of commodities and types of industry, which have been made possible by higher industrial capabilities. Up to the end of Repelita V there were some 400 types of industry that were developed. Meanwhile there were about 4,000 kinds of country’s commodities penetrating the world markets, starting from handicrafts to high-tech industrial products like airplanes.

Exports of industrial commodities noted a significant rise-thanks partly to deregulatory measures-though they have to face some constraints such as slow recovery of the world economy, unpredictable changes and tighter competition. In 1993 exports of industrial commodities reached US$22.944 million or an increase of 17.0% compared to that of 1992 which amounted to US$19.613 million and 247.7% compared to that of 1988 which amounted to US$9.262 million. The increase in exports value has in fact lifted the role of industrial products exports on the whole of the national export from 50.4% in 1988 to 62.3% in 1993. While the role of industrial products exports on the whole of non-oil and non-gas exports increased from 82.1% to 84.7%. The group of multifarious industries was still the largest contributor on the whole of the industrial products exports in 1993, namely 68.4% with and export value around US$15,955. While the group of small-scale industries accounted for 10.3% with an export value of about US$2,672 million. Industrial export commodities showing substantial increase were processed woods, textile, rubber products, some products of electronic industries, as well some products of household electric equipment.

The total amount on investment commitments approved in manufacturing industry in 1993 was Rp 33,203.7 billion, consisting of foreign investment which amounted to US$3,414.8 million and domestic investments Rp 26,203.4 billion. Compared to that of 1992 the investment value in 1993 registered an increase of 9.1%. All of this has led the country’s industrial base to move away from the old, labour-intesive industries toward more sophisticated, more value-added production including consumer electronics, household appliances, computers, electrical machinery, electronic and telecommunications equipment, automobiles and airplanes. This is the condition that the 1988 Guidelines of State Policy required.

Repelita VI, effective from April 1994, places a priority on growth in the fields of agriculture, agro-industry, infrastructure development etc. and will underpin and encourage capital intensive (upstream) industries and small- and medium-sized export oriented-manufacturing projects.


Being the group of industries producing capital goods which generally using high technologies and having close relations with other groups of industries as well as with other economic sectors, it is expected that the development of this group of industries would stimulate economic growth, strengthen and deepen industrial structure and improve industrial design and engineering capability. Policies in this group are placed on the creation of business climate conductive to the development of new industries and the improvement of efficiency and competitive edge.

Still, a greater part of the production of this group of industries is oriented to domestic market. However, the amount of production and its export value noted a heartening development. In 1993 the group’s export value amounted to US$1,959.1 million, higher than that of 1992 which was US$1,798.7 million. Accumulatively, this group of industries during RepelitaV created additional job opportunities for 55 thousand people.

The production of some tool machinery industries indicated a meaningful increase, particularly that of lathe industry and bending machine industry which grew by 51.8% and 53.2% respectively per annum during the last five years. In 1993/94 the production of tool machinery industries noted a slight development compared to that of 1992/93, but the production of flat and table grinding machine grew by 34.6% and 36.0% respectively.

With increase by 20% to 50% in term of volume, the production of machinery and agricultural equipment industries noted a considerable development during the last five years. The production of mini tractors, paddy threshers, hand tractors, and rice huller machines grew respectively by 20.8%, 23.4%, 30.0% and 31.3% on average per annum. However in 1993/94 the production of those machines registered no rise compared to that of 1992/93.

Concerning the production of heavy equipment and constructional industries, some noted an increase tendency and the others were to the contrary. During the last five years the production of plate compactors grew at an average of 56.9% per annum, asphalt sprayers 55.2%, concrete mixer machine 33.8% and grader motors 26.4%. While the production of road/vibro rollers and wheel loaders declined at an average of 45.7% and 7.8% respectively. Yet in 1993/94 the production of excavators and cranes leapt more than 100%, forklifts grew by 40.8%, bulldozers 97.7% compared to that of 1992/93. But the production of road vibro rollers and wheel loaders suffered a drastic drop of 74.2% and 48.4% respectively in 1993/94.

The production of electrical machinery on the whole noted a steady rise during the past five years. In 1993/94 the production of electric motors and distribution transformations grew by 52.6% and 72.2% respectively.

The production of electronic industry during the last five years registered a significant development, growing by 25% per annum. Even the production of telephone sets, mobile radios noted a heartening increase of 59.8% and 52.4% respectively. Encouragingly is that some products of electronic industry could penetrate world markets. In 1993 the export value of electronic goods reached US$1,212,400.9 thousand, or an increase by eleven- fold compared to that of 1989 and 50.9% compared to that of 1992.

The country’s automotive industry has witnessed substantial growth in recent years. The production of four-wheel commercial and passenger cars in 1992 grew by 19.7% to 209.2 thousand units compared to that of 1992. While the production of two-wheel vehicles reached 454.8 thousand, declining by 0.5% compared to that of 1992. The export value of four-wheel and two-wheel vehicles in 1993 amounted to US$23,533.5 thousand and US$113,711.2 thousand, or an increase of 128.1% and 1579% respectively compared to that of 1992.

As for the railway industry, the production of freight cars in 1993 was 40 units, or an increase of 33.3% compared to that of 1992, and the production of passenger coaches was 73 units. For the first time, in 1991 the country exported 50 units of freight cars.

The country’s aircraft industry, the Nusantara Aircraft Industries (PTN), which possesses the most extensive and highly developed facilities for aircraft design, production, overhaul and maintenance in Southeast Asia, produces fixed and rotary wings aircraft. Since its inception in 1976 IPTN has received more than 400 orders from a number of countries. In 1993 alone it produced 9 CN-235 planes and 7 helicopter. While its N-250, a short- takeoff, widebody aircraft designed and produced wholly by IPTN is scheduled to roll out in November 1994. Besides, IPTN also involved in the production of aircraft components for various aircraft manufacturers around the world.

The capability of shipping industry in producing new ships, off-shore constructions, and ship-repairing continues to further. During the last five years the production of vessels and off-shore constructions grew by an average of 38.4% and 25.2% respectively. However, the export value of vessels in 1993 suffered a decline of 37.8% compared to that of 1992, but that of off-shore construction rose by 109.2% to US$92,158.9 thousand from US$44,054.9 thousand in 1992.

As noted in the previous years, the production volume of machinery and factory equipment industries registered an increasing tendency. In 1993, noting a considerable rise were the production of machinery and factory equipment for tea processing industries and for coffee processing industries, the production of blowers and steel construction which each grew by 30.0%, 44.7%, 61.1% and 41.1% respectively. It is encouraging indeed that the nation’s exports of fabrication design and engineering services showed a steady development.

The production of metal industries also showed an increasing tendency. Some productions of steel industries such as concrete iron and wire rods have penetrated world markets. The production of non-steel industries in general noted a tendency to rise. Products of non-steel industries which are exported are among other things aluminum ingots, aluminum extrusion, aluminum circles, aluminum sheets etc.


The development of basic chemical industries still put emphasis on the strengthening and deepening of the industrial structure aimed at improving national technological know-how to enable it to process available natural resources by maintaining a closer interrelatedness between industrial sub- sectors as well as between this group of industries and other economic sectors.

Steady progress has been showed by this group of industries during the last five years. Also during the said period new industries emerged with their new products here as there were previously imported such as cement paper bag, acetic acid, acetic ethyl, ethylene dichloride, vinyl chloride monomer, polyol and optic fibre etc.

In the meantime agro-chemical industries have played an important role in underpinning the increase of agricultural products in the context of maintaining self-sufficiency in rice and augmenting exports. The production of urea fertilizer, TSP fertilizer, pesticides formulation and pesticide active in 1993 saw an increase of 4.5%, 17.3%, 1.5% and 3.7% respectively compared to that of 1992. But that of ZA fertilizer declined by 5.4%.

The production of celluloid and rubber industries keeps on showing an increasing tendency. The production volume of paper in 1993 grew by 162.5% or 2,489.3 tons compared to that of 1988. While the production of vehicles tires elevated by 101% to 9,657.9 thousand units and that of bicycle tires swelled by 20.5% to 21,335.9 thousand units.

During the last five years of Repelita V, in general the production volume of organic chemical industries showed an increase ranging from 5% to 8% per annum. In 1993 the production volume of polystyrene and carbon black saw an increase over 100% respectively.

The production of some inorganic chemical industries in 1993 saw a declining tendency. Even though the production of cement noted an increase during the recent years, but its exports in 1993 saw a decline of 39.2% due to chiefly the increasing demand from domestic market.


The group of multifarious industries has played a greater role in the development of manufacturing industry in the whole. Turning to become export-oriented industries this group has led to the establishment of new industries within the group of basic industries and at the same time strengthening the industrial structure by creating interrelationship between large, medium and small-sized industries.

In recent years, this group of industries saw an increasing tendency, be it in terms of production volume as well as types of product. This group was also the biggest contributor to non-oil and non-gas export earnings. Exports of this group experienced an average increase of 28.1% per annum during Repelita V. The group’s export value in 1993 reached US$15,933.0 million, or an increase of 16.4% compared to that of 1992. The group’s export value in 1993 accounted for 69.8% of the total non-oil and non-gas exports, less 1.4% compared to that of 1992. Furthermore, during the last five years this group of industries absorbed as many as 2, 015,000 job entrants.

The production of food industries still showed a steady increase. Some products even noted an increase of more than 40% in 1993, compared to those of 1988.

A significant development was registered by the production of textile. The production of ready-to-wear clothing in 1993, for instance grew by 20.4% compared to that of 1992 which totaled 77.2 million dozens.

Chemical industries also saw a heartening development during the recent years. New products such as glycerol/glycerin, fatty acid and injection instrument to say some, were produced. The production of rubber and canvas shoes noted the highest average increase of 51.0% during the said period.

Among the construction and general matter industries the production of leather shoes, wood working, and decorative plywood registered a rapid growth. The production of decorative plywood, for instance, reached 76.8 million sheets, or grew more than two-fold compared to that of 1992.


It is the commitment of the Government to continue developing small- scale industries as they can play a greater role in expanding job and employment opportunities as well as in distribution developments and their yields in a more equal fashion. In relation with this, the Government is being engaged in making a bill on the development of small- and medium-scale industries. Apart from that, the Government always encourage state-owned companies, large private companies and banks to help those small-scale industries, through “Bapak Angkat” (Foster Parent) programs.

At the end of 1993 there were 2,022.000 small-scale industries, the greater number of which dealing with food processing, handicrafts, clothing industries, leather processing industries and wood processing industries. Their export value in 1993 amounted to US$2,672.1 million or an increase of 25.8% compared to that of 1992. Parallel with the growing number of small- scale industries the number of job opportunities created by them was also expanding. In 1993 small-scaled industries absorbed some 376.4 thousand job entrants, or an increase of 11.5 compared to those of 1992.

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