Indonesia’s manufacturing sector is currently in a sluggish phase. The latest data from S&P Global shows that Indonesia’s manufacturing PMI remained at 47.4 in May 2025. What does that mean? Production is down, new orders are scarce, and jobs are shrinking. But behind this storm, there’s a golden opportunity for expats, foreign entrepreneurs, and smart investors. The Indonesian Chamber of Commerce and Industry (Kadin) has urged the government to provide tax incentives and pro-industry policies. This could be your moment to enter the Indonesian market!
Indonesia’s manufacturing sector is taking a hard hit. According to the S&P Global report, the country’s manufacturing PMI was at 47.4 in May 2025, still below the normal threshold of 50. However, this figure is an increase from 46.7 the previous month.
Vice Chairman of Kadin for Industry, Saleh Husin, said the situation reflects a slowdown in business activity due to weakened new demand, rising production costs, and inventory adjustments.
“A PMI below 50 reflects contraction in manufacturing activity. Two consecutive months of contraction indicate both structural and short-term problems,” said Saleh, quoted from Bisnis, Tuesday (3/6/2025).
The causes? Global geopolitics — like the Ukraine-Russia war and Middle East tensions — have slowed global trade. China’s sluggish economy is also affecting Indonesia’s exports. Domestically, weak consumer demand is making things worse, even though it’s the backbone of the industry. Coordinating Minister for Economic Affairs Airlangga Hartarto said it’s not just Indonesia; other ASEAN countries are also experiencing similar contractions.
But the issue isn’t just the market. Foreign investors are often anxious about Indonesia’s bureaucracy. Want to set up a PT PMA (foreign-owned company) to enter the manufacturing sector? It can take 3–6 months, especially if your documents are rejected by the OSS RBA system. Then there’s the complex tax system and labor regulations to consider.
To prevent a domino effect from the weakening manufacturing sector, Kadin is pushing four main policies: tax incentives for labor-intensive industries, technology upgrades, competitiveness improvement, and domestic market support. This is a signal to investors: now is the time to enter — but smartly!
Indonesia’s Manufacturing Still Holds Allure
Despite the contraction, Indonesia’s manufacturing sector still has strong appeal. Downstream processing (like raw material refinement) remains a priority, especially with rising commodity prices like nickel and palm oil. Labor-intensive sectors (such as textiles and footwear) and high-tech sectors (like electronics and automotive) are being eyed by the government for tax incentives. For expats aiming to set up small factories or investors targeting large-scale manufacturing, Indonesia offers a domestic market of 270 million people and a strategic ASEAN location.
Read also: Indonesia to Showcase Infrastructure Leadership at ICI 2025 Ahead of G7 Summit in Canada
But entering the market isn’t easy. You’ll need a legal entity, efficient tax strategy, and labor management aligned with the 2025 Omnibus Law. One wrong move could result in tax penalties or labor disputes. That’s where Bizindo becomes your storm shield.
Start Manufacturing in Indonesia Without Bureaucratic Drama
Thinking of launching a manufacturing business? Step one: establish a PT PMA. But it’s not as simple as creating an Instagram account. You’ll need a notarial deed, a Business Identification Number (NIB) via OSS RBA, and a minimum capital of IDR 2.5 billion for certain sectors. The process can take 3–6 months if not managed properly — especially for expats unfamiliar with Bahasa Indonesia. One X post said many foreign investors are stressed out by document rejections (May 2025).
Bizindo’s company registration services make the process seamless. We handle your notarial deed, NIB, and tax number (NPWP) so you can become legally compliant fast and focus on building your factory. With PT PMA status, you can tap into Kadin’s proposed tax incentives, such as income tax reductions for labor-intensive sectors. No need to fear bureaucracy — we’ve got your back!
Targeted Manufacturing Consulting to Hit the Mark
Manufacturing regulations in Indonesia are like a maze. For example, some sectors allow only 49% foreign ownership, such as machine components. Or, VAT of 11% (12% for luxury goods, as per PMK 131/2024) must be reported via Coretax. Foreign investors often get confused — especially with the new 2025 tax incentive policies. A wrong move, and your profit could shrink.
Bizindo’s Corporate Consulting Services offer you a roadmap through this maze. We help you choose the most tax-efficient business structure, navigate ownership rules, and capitalize on government incentives. Whether you’re opening a textile or electronics factory, we’ll provide the right strategy to make you competitive — in line with Kadin’s emphasis on tech and market access.
On top of that, Bizindo’s Accounting, Tax & Payroll services save you time and money. We manage your financial reports, calculate taxes accurately to avoid overpayments, and ensure your employees are paid on time — including BPJS contributions. Want to leverage labor-intensive tax incentives? We’ll optimize everything. Your business will speed up — without running out of fuel!
Leverage the Indonesia’s Manufacturing Opportunity Now!
The 2025 manufacturing contraction isn’t the end — it’s the beginning of new opportunities. With government tax breaks and pro-industry policies, this is the time for expats and foreign investors to enter the Indonesian market. But bureaucracy, tax issues, and labor laws can be daunting. Bizindo is here to simplify it all.
From company registration for fast legality, to smart Corporate Consulting, and Accounting, Tax & Payroll services for efficiency — we’ve got you covered. Want your manufacturing business to thrive in Indonesia? Don’t just dream — make it happen now!
Join the Manufacturing Wave with Bizindo!
Want to profit from Indonesia’s manufacturing sector? Bizindo is here to help set up your PT PMA, create tax strategies, and handle payroll — so your business can thrive. Visit www.bizindo.com and seize the 2025 opportunity!
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