The government's policy of launching economic packages without involving the labor-intensive manufacturing sector feels inappropriate. In fact, as the name implies, labor-intensive manufacturing can play a role in increasing the number of workers.
However, reflecting on the current economic situation, labor-intensive industries need more than just incentives to be able to expand and help the government meet its employment targets.
As part of the 17 Economic Package Programs "8+4+5", the government launched five employment programs. These are the Merah Putih Village Cooperative, community plantations, the Merah Putih Fishermen's Village, the revitalization of ponds along the North Coast of Java (Pantura), and the modernization of fishing boats.
In a press statement at the Presidential Palace in Jakarta, Coordinating Minister for the Economy Airlangga Hartarto explained that these programs had been discussed with President Prabowo Subianto in a limited meeting on Monday afternoon (15/9).
"First, of course, the Merah Putih Village Cooperative which will absorb 681,000 to 1 million workers until December 2025. Then, the Merah Putih Fisherman Village with a target of 100 villages this year, is expected to absorb 8,645 workers," Airlangga told reporters.
The revitalization of 20,000 hectares of ponds along the Pantura coast is claimed to absorb 168,000 workers. Meanwhile, the modernization of fishing boats and the replanting of smallholder plantations could create up to 1.8 million jobs.
"Optimism for economic growth will hopefully reach 5.2%, because the government, through these programs, wants to accelerate spending and increase people's purchasing power," Airlangga said.
Incentives alone are not enough
The business world regrets that of the five government programs set to absorb labor, the labor-intensive industrial sector is not taken into account.
In fact, labor-intensive industries have the main objective of expanding employment, in addition to contributing to national production capacity and strengthening economic resilience.
Chairman of the Indonesian Footwear Association (Aprisindo) Eddy Widjanarko stated that his party can understand the government's limitations to maximally assist labor-intensive industries. Efforts that the government has made, such as the Labor Intensive Industry Credit (KIPK) scheme, should also be appreciated even though the realization is still far from the ceiling set.
"What we need more is that licensing is made easier and policies are not changed much by law enforcement officials. We also want the government to change the political image that the labor-intensive industrial sector is the only economic savior in terms of job creation," said Eddy when contacted by SUAR, Tuesday (16/9).
In line with Eddy, Chairman of the Indonesian Furniture and Handicraft Industry Association (HIMKI) Abdul Sobur stated that labor-intensive industries need certainty and ease of market access more than fiscal incentives or cheap credit.
Sobur stated that there are three things that are very urgent for the government to pay attention to and handle immediately. First, ease of export and market access. Second, certification and proportional regulations. Third, access to financing according to the character of the industry with easier requirements.
Sobur noted that Indonesia's furniture industry is still highly dependent on global market demand, namely the United States, Europe, and Japan. Therefore, the acceleration of bilateral and multilateral trade agreements and logistics facilities to reduce export costs to be more efficient, accompanied by simpler and cheaper certification, is a necessity.
"The KIPK scheme is good, but difficult to access due to collateral requirements and bureaucracy. We need purchase-based financing with much lower interest rates, so that we can fulfill large orders without being hampered by working capital," said Sobur when contacted by SUAR, Tuesday (16/9/2025).
In addition to macroscopic encouragement, energy incentives to save on production costs are also urgently needed. A number of furniture centers in Central and West Java are currently facing high electricity and gas costs, Sobur notes. If the incentive is given in the form of a reduction in energy tariffs, the impact will be more directly felt for the sustainability of production.
"Incentives such as KIPK do help. But a combination of ease of export, proportional certification, financing with light terms, and energy/logistics support is much more needed so that labor-intensive industries really survive, as well as grow amid global pressures," Sobur concluded.
Get to the root of the problem
Underlining the needs of labor-intensive industry players, University of Indonesia LPEM FEB macroeconomic researcher Teuku Riefky said that in order to increase job creation in labor-intensive industries, the government must resolve the root of the problems faced by industry players. Namely, regulation and legal certainty.
The government must resolve the root of the problems faced by industry players. Namely, regulation and legal certainty.
"Providing incentives for labor-intensive industry players does not really solve the problem to the root, even though the target is right. As a result, even though it is positive for the community, the effect of providing these incentives will be limited," said Riefky when contacted by SUAR, Tuesday (16/9).
In addition, if the provision of low-interest credit schemes is a form of government support, it should be more temporary, not a permanent solution to solve all the problems faced by industry players.
"Going forward, the fundamental issues of legal certainty, investment climate, and regulatory reform still need to be encouraged to ensure that labor-intensive industries are productive and able to absorb labor," concluded Riefky.
