The Indonesian government has made electronic devices one of the six manufacturing priorities in the rapidly growing industrial sector.
Since 2018, the government has identified electronics as one of the main industrial sectors to be developed.
Several industrial sectors recorded brilliant growth performance in Q3 2022, with the metal goods, computer, electronic goods, optical and electrical equipment industries accounting for 12.56% growth.
“The rapid growth in this sub-sector is due to government policies to increase domestic demand. Among other things, when we relaxed PPnBM (Sales Tax on Luxury Goods), which had a tremendous impact on the market, and also the P3DN program which helped encourage the absorption of domestic products,” said Agus Gumiwang Kartasasmita, Minister of Industry.
Indonesia still imports electronics worth US$ 25.5 billion
However, Indonesia still imported a lot of electronic products in 2022 which had reach US$ 25.5 billion.
As much as 53% or US$ 13 billion of the total imports are in the form of components for the electronics and telematics industry. Indonesia still imports a number of these electronic commodities due to a number of crucial issues.
First, the lack of domestic component suppliers, some of Indonesia’s electronic production for the domestic market, and integration of Small Medium Enterprises (SMEs) for the global market is still minimal. As many as 80 out of 510 SMEs are engaged in the electrical equipment manufacturing sector.
Second, the infrastructure is inadequate. The majority of manufacturing operations in Indonesia are concentrated only in Java and Batam.
Third, human resources are less skilled. Only 1.4% have completed tertiary education, Indonesia is still dominated by an unskilled population. In 2018, 11.4% of vocational high school (SMK) graduates were unemployed, and 5.2% of university graduates were unemployed.
Business opportunities through the growth of the electronics industry
At present, the electronics industry’s gross domestic product (GDP) will grow 6.71% in 2022. This increase is due to high demand.
Indonesia’s consumer electronics segment is the most developed, this is due to the large household market of 64 million people.
In 2020, revenue in the electronic industry was around US$ 5,553 million, an increase of 39.4% year over year.
In this segment, it is expected that there will be an increase of 12.2% from 2020 to 2025 with transaction value reaching US$ 9,988 million.
Meanwhile, households in Indonesia spend 9% of their household expenses on audio video electronics.
In addition, revenue in the household appliances sector reached US$ 866 million in 2020. It is estimated that growth will reach 15.7% from 2020-2025.
Meanwhile, smartphone penetration in Indonesia has increased to 70% of the population in 2020 and will reach 89% in 2025.
On the other hand, with the development of smartphone use and digitization, in the e-commerce sector, it was recorded that in 2022 the use of e-commerce electronic transactions had reached IDR 476.3 trillion, an increase of 18.7%.
