Jakarta, IO – Indonesia’s manufacturing sector continued to improve in July 2026 after facing pressure on both production and demand in the previous month. The country’s Industrial Confidence Index (IKI) rose to 53.10 in July, up 0.20 points from 52.90 in June, signaling sustained expansion in manufacturing activity.
As of July 2026, 22 of the country’s 23 manufacturing subsectors had expanded, accounting for 98.6 percent of Indonesia’s non-oil and gas GDP.
“Indonesia’s manufacturing industry has proven its resilience while facing pressures on production and demand in the domestic and global markets, as reflected by the Industrial Confidence Index rising from 52.90 in June to 53.10 in July 2026,” said Ministry of Industry spokesperson Febri Hendri Antoni Arief during the ministry’s July 2026 IKI release in Jakarta on Thursday, July 30.
The improvement was driven largely by stronger demand. The IKI’s new orders component increased by 0.45 points to 53.80, supported primarily by higher domestic demand.
According to the ministry, the increase was fueled by several factors, including stronger demand for manufactured products from various sectors of the economy, increased household spending ahead of the new school year and holiday season, and government spending through programs such as the Free Nutritious Meals (MBG) initiative, Red and White Village Cooperatives (Kopdes Merah Putih), the Fishermen’s Village program, the transition from B30 to B50 biodiesel, and the construction of three million subsidized homes. New industrial investment and export orders also contributed to the stronger performance.
On investment, the Ministry of Industry recorded 152 new manufacturing companies commencing operations in Indonesia during the first half of 2026. These projects represented Rp157.6 trillion in investment and created 56,347 new production jobs.
“The increase in Indonesia’s manufacturing activity in July 2026 was mainly supported by stronger domestic demand, particularly as government programs such as MBG, the continued development of Red and White Village Cooperatives, B50 biodiesel, the Fishermen’s Village initiative, and the three-million subsidized housing program began to gain traction,” Febri said.
Manufacturing output also improved during the month. The production component of the IKI rose 0.27 points, from 54.28 in June to 54.55 in July, despite recent challenges, including power outages, rising industrial gas prices, and higher raw material costs, particularly for imported inputs.
Febri acknowledged that the manufacturing sector continues to face several headwinds, including slowing export demand, rising logistics costs due to geopolitical tensions, and an influx of imported products in several subsectors.
To strengthen the competitiveness of domestic industries, the Ministry of Industry is continuing to implement a range of strategic policies. These include accelerating the implementation of the Specific Natural Gas Price (HGBT) policy, expanding the use of locally made products through Domestic Component Level (TKDN) requirements, tightening import controls, accelerating industrialization, and promoting high-tech manufacturing investment to better integrate Indonesia into global supply chains. (eka)
