- Indonesia strengthens its automotive supply chain through major partnerships with SMEs.
- The Link and Match program supports import substitution and industrial competitiveness.
- The automotive sector grows strongly despite high dependence on imported components.
Indonesia advanced its import-substitution strategy by establishing numerous collaborations between leading automotive firms and small to medium enterprises (SMEs) to lessen reliance on imported parts. The Industry Ministry reiterated its dedication to enhancing the nation's automotive supply chain via strategic partnerships between major manufacturers and SMEs.
Within the Partnership Program for Automotive SMEs and Large Industries, 36 Memoranda of Understanding were executed between 33 SME suppliers of automotive components and 24 prominent firms in the transportation equipment industry. The collaboration seeks to establish sustainable markets for SME goods, enhance competitiveness, and create a wide-ranging multiplier effect for the national automotive sector.
Launching the 2025 Link and Match program in Jakarta, Industry Minister Agus Gumiwang Kartasasmita highlighted that import substitution is key to strengthening Indonesia’s industrial framework. “The core of our initiative today is how we implement our import substitution program to strengthen the industrial structure,” he said, as quoted by the ministry’s official website.
The transportation equipment sector continues to be a vital part of Indonesia’s manufacturing foundation. In the third quarter of 2025, it accounted for 1.28 percent of the national GDP. Featuring production networks that include vehicles, bodywork, heavy machinery, specialized vehicles, motorcycles, and parts, the subsector propels a labor-intensive value chain interconnected with numerous supporting industries.
Also Read: Manufacturing Sector to Invest 122 Trillion Won in New Facilities
In this subsector, the car industry has a leading position. Indonesia presently accommodates 39 manufacturers of four-wheel vehicles, with a yearly production capability of 2.39 million units, along with 82 manufacturers of two- and three-wheel vehicles that have an annual production capacity of 11.2 million units. Prominent automobile manufacturing countries display a common trend: organized small and medium-sized enterprise suppliers, enduring contracts, technology exchange, and ongoing quality improvement.
Indonesia still encounters significant import levels of automotive parts. Between January and September 2025, automotive imports reached USD 8.26 billion, while component imports increased over 20 percent compared to the previous year. "The minister emphasized that by leveraging opportunities for local SMEs, we can achieve successful import substitution and enhance our manufacturing framework."