Jakarta – Cooperatives and Small and Medium Enterprises (SMEs) Minister Teten Masduki has urged players in the Indonesian automotive industry to enhance collaborations with micro, small, and medium enterprises (MSMEs) that provide automotive parts, aiming to bolster downstreaming efforts.

“I encourage the automotive industry to engage in partnerships for the advancement of automotive MSMEs, fostering their growth and development,”

he remarked during a discussion held here on Friday, as stated in a press release from the ministry.

According to data from Statistics Indonesia (BPS), the automotive industry contributed Rp311 trillion (approximately US$20.01 billion) to the nation’s economy in 2023, accounting for about nine percent of the total gross domestic product (GDP) of the non-oil and gas processing industry. From 2018 to 2023, the industry witnessed a growth rate of 4.1 percent.

Figures from the Association of Indonesian Automotive Manufacturers (Gaikindo) revealed that the production of four-wheeled vehicles reached 1.395 million units in 2023. Additionally, data from the ASEAN Automotive Federation (AAF) indicated a production of 5.2 million units of two-wheeled vehicles.

Minister Masduki highlighted the substantial capacity of automotive SMEs, citing their ability to supply 65 percent of vehicle and heavy equipment parts.

He emphasized the crucial role of MSMEs in providing automotive parts, particularly as Indonesia continues to develop its electric vehicle (EV) ecosystem.

“The EV industry’s emergence presents significant opportunities for MSMEs to establish partnerships as part of the vehicle assembly industry’s supply chain,” he added.

To encourage MSMEs in producing automotive parts, the government has issued Government Regulation Number 10 of 2021 concerning Investment. This regulation mandates large-scale auto parts industries to collaborate with auto parts SMEs.

Furthermore, the Ministry of Cooperatives and SMEs has established a joint production house to promote the inclusive development of the automotive industry ecosystem.

“We are committed to fostering collaboration, fostering innovation, and building strong partnerships to ensure that MSMEs in Indonesia not only thrive but also contribute significantly to the national economy and sustainable economic growth,” remarked Minister Masduki.