INDONESIA plans to open up more sectors to foreign investors and reboot its stringent labor laws to become a regional manufacturing powerhouse rivaling Germany and South Korea, according to Industry Minister Airlangga Hartarto.

President Joko Widodo’s government will rely on automotive, chemicals and electronics industries to push the contribution of manufacturing sector to 25 percent of the nation’s economy by 2025 from 20 percent now, Hartarto said. The move may help boost exports from Southeast Asia’s largest economy and tackle its current account deficit, he added.

“Our target is to be the manufacturing hub of ASEAN,” Hartarto said, referring to the Association of Southeast Asian Nations. Indonesia will seek to eclipse Germany and South Korea and match up to China as a base for making everything from electric vehicles to petrochemical products, he said.

Widodo, who is preparing for a second five-year term, is looking to rejuvenate the country’s struggling manufacturing sector to bolster growth, help rein in the current account deficit and create millions of jobs. Indonesia has been growing at about 5 percent a year, well short of the president’s 7 percent target, as it has long relied on exports of raw commodities.

The government’s initiatives to bolster manufacturing will include relaxing the negative investment list, which regulates levels of foreign ownership across hundreds of sectors, implementing tax holidays for both domestic and foreign firms, and reforming the labor law, Hartarto said.

Widodo has a greater mandate and political support to address sensitive issues such as labor law. (SD-Agencies)