Exploring Indonesia: Diversity, Manufacturing Strengths, and Global Trade

Overview of Indonesia

Indonesia, the world’s fourth-most populous country, is a Southeast Asian archipelago consisting of over 17,000 islands. With a population approaching 275 million, it is the largest Muslim-majority nation and plays a significant role in global economics and culture.

This article delves into Indonesia’s demographics, new capital city, religious landscape, languages, manufacturing capabilities, and trade dynamics.

Population and Demographics

As of January 2025, Indonesia’s population is estimated at approximately 289.9 million people. This figure reflects a steady growth rate of around 1.28% compared to the previous year. The population density is about 152.2 people per square kilometer, with significant variations across its numerous islands.

The demographic structure is characterized by a young population, with a median age of around 30 years, which presents both opportunities and challenges for economic development. Urbanization is rapidly increasing, with Jakarta being one of the most populous cities globally.

New Capital City: Nusantara

In a historic move aimed at addressing congestion and overpopulation in Jakarta, Indonesia is in the process of relocating its capital to a newly planned city named Nusantara.

Located in East Kalimantan province on Borneo Island, Nusantara is over 1,000 kilometers away from Jakarta. The construction began in July 2022, with an estimated cost of $35 billion. Nusantara aims to alleviate the pressures faced by Jakarta and is expected to accommodate nearly 2 million residents by 2045.

The project envisions a sustainable “smart forest city” with advanced infrastructure and green spaces, although it has faced criticism for environmental impacts and delays in construction.

Key Features of Nusantara

• Location: East Kalimantan, Borneo.
• Projected Population: Nearly 2 million by 2045.
• Construction Phases: Expected to be completed in five phases by 2045.
• Environmental Considerations: Aimed at being a green metropolis but criticized for potential ecological damage.

Religions

Indonesia is known for its rich tapestry of religious beliefs. According to Statista, in 2023, over 87% of Indonesians declared themselves to be Muslim, followed by 7.4% who were Christians. Indonesia has the largest Islamic population in the world and for this reason, is often recognized as a Muslim nation.

The country officially recognizes six religions: Islam, Protestantism, Catholicism, Hinduism, Buddhism, and Confucianism. Islam is the predominant religion, practiced by approximately 87% of the population, primarily adhering to the Sunni denomination. Other significant religions include Protestantism (6.5%), Roman Catholicism (3%), Hinduism (1.6%), and Buddhism (0.7%)—the latter mainly among the Chinese community.

Languages

The linguistic landscape of Indonesia is incredibly diverse, with over 583 languages spoken across its islands. The official language is Bahasa Indonesia, which serves as a unifying medium for communication among diverse ethnic groups. Regional languages such as Javanese and Sundanese are widely spoken and reflect the country’s rich cultural heritage.

Manufacturing Sectors & Capabilities

Indonesia’s manufacturing sector is pivotal to its economic landscape, contributing approximately 20% to GDP. It has emerged as the 10th-largest manufacturing nation globally, driven by sectors such as textiles, electronics, automotive production, and food processing.

Indonesia’s manufacturing sector plays a crucial role in its economy, contributing approximately 20-25% to the national GDP. It ranks as the 10th largest manufacturing nation globally, employing around 25 million workers—about one-fifth of the country’s workforce driven by sectors such as textiles, electronics, automotive production, and food processing.

The government has initiated the “Making Indonesia 4.0” roadmap to enhance manufacturing capabilities through digital technology and automation and this further aims to further enhance this sector’s growth to position Indonesia among the top ten economies worldwide by 2030.

Key industries within this sector include:

Food and Beverage

The food and beverage sector is the largest segment of Indonesia’s manufacturing industry. It leverages the country’s rich agricultural resources, producing a wide range of products such as palm oil, cocoa, coffee, and processed foods. Indonesia is the world’s leading producer of palm oil producing more than 30 million tons annually, which plays a crucial role in both domestic consumption and export.

Automotive

The automotive industry is another critical sector.  Indonesia aims to become a hub for electric vehicle production by targeting a 20% output from battery-powered vehicles by 2025. As a matter of fact, is at the forefront of challenging Thailand’s title as the ‘Detroit of Asia. Thailand is scrambling to defend its position as Indonesia closes the gap in auto production.

This industry has seen substantial growth due to rising demand for personal vehicles among the growing middle class. Indonesia manufactures various automobiles and vehicle parts, catering to both domestic needs and export markets.

Electronics

The electronics sector in Indonesia has gained momentum in recent years, driven by increasing demand for electronic goods. The country produces a diverse array of products, including mobile phones, home appliances, and automotive electronic components. This sector is becoming increasingly important as international manufacturers establish operations in Indonesia.

Textiles and Apparel

Indonesia is a prominent player in the textiles and garments industry, known for its exports of clothing and fabric products. With a value of approximately USD 13.83 billion, the industry is witnessing a significant growth trajectory and is expected to reach USD 18.10 billion by 2029. The sector benefits from a combination of local craftsmanship and access to raw materials, making it competitive in the global market.

Chemicals

The chemical manufacturing sector includes the production of various chemical products used in agriculture, pharmaceuticals, and industrial applications. This sector is essential for supporting other manufacturing industries and contributes significantly to exports.

Hard Goods

Hard goods, which encompass household appliances, machinery, tools, and durable products, form an important segment of Indonesia’s manufacturing landscape. This sector caters to both local and international markets by producing long-lasting goods.

Rubber Products

Indonesia is also a major producer of rubber and rubber products, leveraging its abundant natural resources to meet both domestic demand and export needs. The country is the second-largest rubber producer worldwide. It is no wonder that rubber is also one of the most important agricultural commodities in the archipelago.

The government’s efforts to attract foreign investment are evident through tax incentives and regulatory reforms aimed at enhancing competitiveness. Despite its growth potential, the manufacturing sector faces challenges such as rising labor costs and competition from countries like China.

Trade Expertise in Exports & Imports

Indonesia’s trade landscape is marked by significant exports and imports that reflect its economic strengths and dependencies. In 2024, Indonesia recorded a trade surplus of approximately $31 billion with total exports valued at $264.7 billion.

The country has set an ambitious target to increase exports by 7.1% by 2025 as part of its broader economic growth strategy.

Key major export products include:

• Palm Oil: The world’s largest producer.
• Rubber and Coffee: Significant contributions to global markets.
• Minerals: Including nickel and coal.
• Nickel Ore.
• Coal.
• Copper Ores.

Key Imports

Indonesia imports refined petroleum products, vehicle parts, machinery, and wheat.

Major trading partners include China, Japan, the United States, Singapore, South Korea, Thailand, Malaysia and Australia.

The Future of Indonesia

With its youthful population, abundant natural resources, and strategic location, Indonesia is poised to become a global economic powerhouse. The development of Nusantara, coupled with a focus on sustainable growth and innovation, underscores the nation’s commitment to creating opportunities for its people and partners worldwide.

Conclusion

Indonesia’s unique blend of cultural richness, economic potential, and strategic vision makes it a country to watch on the global stage. From its burgeoning manufacturing capabilities to its pivotal role in international trade, Indonesia offers endless opportunities for businesses and investors alike. As the nation continues to evolve and embrace its diverse identity, it’s clear that Indonesia’s future is as bright as its heritage is profound.

You also have the chance to experience firsthand what Indonesia’s manufacturing has to offer by joining us on an upcoming trip from February 23 to March 2, 2025. Registrations are ongoing, so act now to secure your spot!