As global supply chains realign, Indonesia is emerging as a leading hub for export-oriented manufacturing in Asia. With enterprises seeking diversified bases beyond China, the country’s strategic location, abundant resources, and supportive policies are drawing strong attention from international investors.
Industrial Expansion and Sectoral Drivers
Indonesia’s position on key maritime routes provides access to over 600 million ASEAN consumers and broader markets in South Asia, the Middle East, and Oceania. This advantage is fuelling growth across multiple sectors, from textiles and electronics to automotive and pharmaceuticals. Most notably, Indonesia’s reserves of nickel and bauxite have made it a critical node in the electric vehicle (EV) supply chain, attracting investment from China, South Korea, and the United States.
The government has reinforced this momentum through tax holidays, duty exemptions, and land-use incentives. Special Economic Zones in Batam, Morowali, and Central Java offer streamlined licensing and infrastructure readiness. At the same time, Indonesia’s participation in the Regional Comprehensive Economic Partnership (RCEP) provides reduced tariffs and harmonised trade rules, enhancing its role in “China+1” strategies.
According to the Indonesian Investment Coordinating Board (BKPM), foreign direct investment in manufacturing rose by 12.5 per cent year-on-year in the first quarter of 2025, led by inflows into electronics, automotive parts, and processed foods. Recent commitments, including a German automotive expansion and a Chinese battery manufacturer’s new facilities, together exceeding US$1.3 billion, underline Indonesia’s transformation from consumer market to production powerhouse.
For Chinese companies, Indonesia offers a tariff-advantaged manufacturing base with access to critical resources and growing regional markets. Establishing operations in Indonesia not only supports global competitiveness but also provides resilience against evolving tariff regimes and geopolitical pressures. Early movers will benefit from partnerships, long-term cost advantages, and a central role in emerging ecosystems such as EV batteries, advanced electronics, and green manufacturing.
Capturing these opportunities requires clear navigation of Indonesia’s regulatory and operational environment. Investors face challenges in understanding SEZ incentives, securing licences, and aligning with local labour and environmental requirements.
NBK (Nusantara Bisnis Konsultan Indonesia) provides guidance across these areas, assisting enterprises with market entry assessments, regulatory compliance, and coordination with agencies such as BKPM and the Ministry of Finance. With a trilingual advisory team fluent in Chinese, English, and Indonesian, NBK bridges communication gaps and ensures investors enter Indonesia with clarity and confidence.
Conclusion
Indonesia’s manufacturing ascent is reshaping the map of global industry. With rising foreign investment, government support, and integration into international trade frameworks, the country offers one of the most compelling manufacturing stories of this decade. For Chinese enterprises, the opportunity lies not only in immediate returns but in establishing a strategic presence in Southeast Asia’s fastest-growing production hub.