Indonesia needs to boost HR and R&D in manufacturing

Manufacturing, the largest contributor to the country's GDP, will play a big role in economic recovery, and government support will be key.
By: | December 1, 2020

The government needs to play a more active role in initiating research and development (R&D) in the manufacturing sector to promote job creation and attract sustainable investment for the future, Institute for Development of Economics and Finance (INDEF) economist Faisal Basri said. 

Investment in R&D, mostly made by the government, was only 0.3% of GDP in 2018, according to data from the Research and Technology Ministry.  

“We need to boost the quality of human resources to address the skill mismatch issue by improving the integration between the education system and industry needs, said Indonesian Chamber of Commerce and Industry (Kadin) deputy chairwoman Shinta Kamdani.  

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The manufacturing sector’s contribution to the country’s GDP was highest among all business sectors at 19%. However, it shrank 6.19% in the second quarter and 4.13% in the third quarter due to declining domestic and global economic activity. 

The purchasing managers’ index (PMI) for manufacturing increased from 47.2 in September to 47.8 in October; both readings were lower than August’s 50.8. Index readings below 50 indicate a contraction.