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Sectoral Country Profile Fig. 1: Employment by Major Economic Activity ('000s) 2000-2008 Agriculture Agriculture, Hunting and Fishing 100,000 Mining and Quarrying The agriculture sector supports the livelihood of millions of Indonesians. With more than 60 per cent of the population living in rural areas, farming remains the main occupation and source of Manufacturing income for much of the country’s population. The share of agriculture in Indonesia’s overall economic activity has been declining for several decades, as structural shifts in the economy have Electricity, Gas and occurred away from agriculture oriented activities toward a service driven economy. In 1970, Water Supply 80,000 agriculture accounted for 49 per cent of value added to GDP, compared to 2008 when agriculture Construction contributed only 13 per cent of value added to GDP (see Fig. 2). Over the same period, the percentage of the workforce engaged in agriculture fell from 66 per cent to 38 per cent. Wholesale and Retail Nevertheless, in 2008, the sector employed more than 39.5 million people, making it Indonesia’s Trade largest employment sector (see Figs. 1 & 3). Hotels and Restaurants 60,000 In 2008 agricultural production also expanded at the fastest rate, 4.8 per cent, over the past 15 years, a result of higher global commodity prices and good weather patterns in the country. The Transport, Storage, majority of Indonesian farmers operate with less than one-half hectare of land today. In 2008, food Communications crop production from smallholder farmers reached IR 347,841.7 out of a total agricultural Financial Intermediation production value of IR 713,291.4 million. Major agricultural crops include rice, maize and soybeans, with each crop experiencing increased production in 2008, compared to 2007. Rice 40,000 Real Estate, Rental, paddy production increased 5.5 per cent to 60.3 million tons, maize production increased 22.8 per INDONESIA Business Services cent to 16.3 million tons, and soybean production increased 30 per cent to 775.7 thousand tons. Public Administration, The cultivation of livestock, both for domestic consumption and export sales has also increased in Defence recent years, driven by poultry, cow, goat and sheep cultivation. Increasing attention is being given Education by the government to smallholder farming and to developing agricultural exports, especially palm 20,000 oil, rubber, palm kernel oil, coffee, and cocoa beans. Health and Social Work Technological advances in agricultural production have also aided the country’s increased agricultural productivity levels, and Indonesia has devoted national resources to enhance and Social and Personal Services develop new research and development schemes in the agricultural sector. The Indonesian Agency for Agricultural Research and Development (IAARD) of the Indonesian Ministry of 0 Other Services Agriculture has 11 Research and Fig. 3: Employment in Agriculture 2000 2002 2004 2006 2008 Development Centers to manage ('000s), 2000-2008 Source: ILO Laborsta; Persons aged 15 years and over. Aug. of each year. 2005: Nov. research and development on food crops, 44,000 horticulture, estate crops, livestock, Fig. 2: Sectoral Value Added veterinary, soil and agro-climate, agro- 43,000 socio economics, machinery 2,500,000 (Billion Rupiah, Constant Prices) Com., Social & Personal Serv. development, post-harvest, biotechnology 42,000 Public Administration and agricultural technology assessment. 2,000,000 Financial & Bus. Serv. 41,000 In 2008 wages for agricultural workers Trans. & Comm. remained relatively low, averaging IR 1,500,000 Hotels & Restaurants 532,187 per month, well below the 40,000 Wholesale & Retail national average of IR 976,923. Working 1,000,000 Trade time in agriculture was below the national 39,000 Construction average working time as well, at 32.9 Utilities hours per week compared to the national 38,000 500,000 average of 41 hours per week for all Manufacturing 2000 2001 2002 2003 2004 2005 2006 2007 2008 industries. Source: ILO Laborsta; Persons aged 15 years and over. 0 Mining 2004 2005 2006 2007 2008 2009 Agr., Forestry & Fishing Source: Badan Pusat Statistik Republik Indonesia Sectoral Activities Department Key Labour Market Indicators (2009) Manufacturing: Food & Beverage Products Economically Active Population Total: 113,740,000 Manufacturing as a whole employed more than 12.5 million Indonesians in 2008, representing Labour Force Participation Rate: an overall increase of nearly 1 million manufacturing jobs since 2000. Manufacturing as a Total: 67.6% whole is the third largest employment sector in the country (see Figs.1 & 4). The top manufacturing subsectors according to annual production output include petroleum Unemployment Rate manufacturing, machinery and equipment manufacturing, radio, television and Total: 8.1% communications equipment manufacturing, and chemical and chemical product manufacturing. However, the largest share of manufacturing employment, production and value added in Wholesale & Retail Trade Indonesia is in food and beverage products manufacturing. Wholesale and retail trade (commerce) is the second largest employment industry in Indonesia, reaching an employment level of nearly 17.2 million people in 2008, reflecting Manufacture of Food Products and Beverages a16.7 per cent of employment in the total economy (see Figs. 1 & 5). Employment in the industry peaked in 2004 at 18.5 million, though employment levels have been growing in A substantial portion of the manufacturing sector is based on Indonesian agriculture, recent years. Wholesale and retail trade also contributed more than 14 per cent of value specifically the processing and packaging of food and beverage products. In 2008, the sub- added to GDP in 2008 (see Fig.2). industry employed 1.3 million people and contributed 16.2 per cent of value added to the In terms of Indonesia’s merchandise trade (much of it through wholesale merchants), manufacturing industry (see Fig. 2). Nearly 23 per cent of all enterprises operating in the exports exceeded 139.6 billion USD in 2008, while merchandise imports into the country manufacturing sector in 2008 were engaged in food and beverage processing with more than reached 126.9 billion USD. The structure of Indonesia’s exports is relatively balanced INDONESIA 6,300 enterprises operating in the industry, an increase from just 4,500 enterprises in 2001. among primary agricultural commodities, fuels and mining products and manufactured The main food products in Indonesia include processed and preserved meat; powdered, goods. Major export products in 2008 included vegetable oil and fats, liquefied natural condensed, and preserved milk; canned fruits and vegetables, canned fish; and soybeans. gas, crude petroleum, coal and rubber. Indonesia’s main export trade partners include The Indonesian government has been active in developing the food and beverage industry Japan, the European Union, the United States, Singapore and China. with the long-term economic development goal of creating a strong and balanced industrial The structure of the wholesale and retail trade industry is dominated by small and micro- sector and a resilient agricultural sector. The focus of government policy has been on establishments. Out of 10.3 million establishments operating in the industry, 2.3 million developing a small-scale food industry. Small-scale agro-industry is directed toward the are classified as small establishments and 7.9 million are classified as micro- diversification of Indonesia’s exports beyond petroleum and toward enhanced rural establishments. However, increasing numbers of convenience stores and multi-format development. Business assistance is being provided to nascent small enterprises by retailing are benefiting from strong domestic demand. With stronger economic growth appointing several large state-owned industries as “foster parents” for a group of small dispersed throughout Indonesia, many major retail chains are moving beyond Jakarta and enterprises to give them financial, technical, and marketing assistance. opening new outlets across the country. Modern retail businesses such as hypermarkets, supermarkets, and mini-markets are replacing more traditional retail outlets, including wet Overall, employees in Indonesia’s Fig. 4: Employment in Manufacturing and markets and independent small grocers. Growth of these retailers includes large foreign- food and beverage manufacturing Food & Beverages ('000s), 2000-2008 owned companies such as Carrefour, Giant, Lotte and Lion Superindo. 14,000 1,600 industry work longer hours for lower wages than workers across Fig. 5: Employment in Wholesale & Retail 12,000 1,400 Overall, working conditions in the total economy. In 2008, the the sector indicate that on Trade ('000s), 2000-2008 1,200 19,000 10,000 average wage in the subsector average workers in wholesale 18,500 1,000 was IR 775,891, lower than total and retail trade work longer 8,000 manufacturing at RI 868,886 and 18,000 800 hours for lower wages, as 17,500 6,000 also lower than the national compared to the national 600 average of RI 976,923 per month. average. The average wage 17,000 4,000 400 On average all manufacturing for wholesale and retail trade 16,500 sector employees worked 43.8 2,000 reached RI 963,734 in 2008, 16,000 200 hours per week in 2008, more just below the national 15,500 0 0 than the national average of 41 average of RI 976,923, while hours per week in the total 15,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 average weekly working hours economy. 14,500 Food
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