Indonesian Manufacturing Sector Research Articles

Analisis Penyerapan Tenaga Kerja Sektor Industri Manufaktur Besar dan Sedang di Indonesia

This study aims to determine and analyze how influence of wages, output, capital and tax on employment in the large and middle manufacturing sector in Indonesia. This research type is descriptive and inductive research. This research type is descriptive and inductive research. This study uses panel data regression analysis using the Fixed Effect Model (FEM) method. The data used is secondary panel regression data with a combination of 24 sub-sectors of large and medium manufacturing industries in Indonesia from 2010- 2019 obtained from related institutions and then analyzed using a panel regression model by testing classical assumptions. The results of the study show that simultaneously, wages and output have a significant effect on employment in the large and medium manufacturing sector in Indonesia. Meanwhile, capital and taxes have no significant effect on employment. Furthermore, partially (1) wages have a positive and significant effect on employment, (2) output has a positive and significant effect on employment, (3) capital has a positive and insignificant effect on employment, (4) taxes have a positive effect and are not significant to employment.

TRANSFER PRICING MULTINATIONAL COMPANIES IN INDONESIA: THE ROLE OF GOOD CORPORATE GOVERNANCE (GCG), TUNNELING INCENTIVE AND LEVERAGE

The aims of study were 1) to analyze the effect of Good Corporate Governance (GCG) on transfer pricing; 2) Analyzing the effect of tunneling incentive on transfer pricing and 3) Analyzing the effect of leverage on transfer pricing. The research population were multinational companies in the manufacturing sector in Indonesia at 2010-2019. Methods of analysis used multiple regression analysis. The results showed that 1) GCG had a positive and significant effect on the company's transfer pricing. Hypothesis H1 which states that GCG had a positive effect on the company's transfer pricing is proven: 2) Tunneling Incentive (TI) had a positive and significant effect on the company's transfer pricing. Hypothesis H2 which states that Tunneling Incentive (TI) had a positive effect on the company's transfer pricing is proven; 3) Leverage had not positive and significant effect on the company's transfer pricing. Hypothesis H3 which states that leverage has a positive effect on the company's transfer pricing is not proven.

Ambidexterity Behavior of Creative SMEs for Disruptive Flows of Innovation: A Comparative Study of Indonesia and Taiwan

Disruptive innovation forces small-business managers to innovate by carrying out exploitation and exploration activities simultaneously. This ambidexterity is crucial to the survival of today’s businesses, especially small and medium-sized enterprises (SMEs). In the organizational structure of SMEs, the manager and owner play an essential role in determining the business orientation. This study examined the influence of SME managers’ social networks on the organization’s ambidexterity and its impact on the firm’s innovation performance. This study used two moderating variables in the form of two internal factors in respect to managers: how proactive they are and their commitment to innovation. The study population was drawn from SMEs in the creative manufacturing sector in Indonesia and Taiwan, with a total sample of 224 SMEs, including 101 from Indonesia and 123 from Taiwan. The analytical technique was the PLS-SEM, conducted by the Smart-PLS software version 3.3.6: Hamburg, Germany. The results supported the construction in both countries. The results of the multiple-group analysis show that the SMEs in Indonesia exhibited greater ambidexterity, commitment to innovation, and innovation performance than those in Taiwan.

Controlling Supplier Supply Stability with High Demand During the Covid-19 Pandemic at PT PQS

<p class="02abstracttext">COVID-19 with a snap into a very influential factor in all sectors of the economy worldwide. The decrease in demand is also strongly felt in the manufacturing sector in Indonesia, even there are some factories were forced to have to lay off thousands of employees because it is not able to pay the salaries of employees. The opposite condition was experienced by PT PQS Indonesia, which experienced an increase in demand by 40% compared to the average demand for 6 months before COVID-19, because some of the company's branches in other countries had stopped production because they had to follow local government policies. Eventually all orders were sent to be produced at PT PQS Indonesia. The increase in demand does not mean that PT PQS Indonesia did not experience obstacles during the COVID-19 pandemic, the problem faced was the decline in delivery performance from suppliers, which impacted on the reduced stock of raw material stock and could even lead to production stops. This is because the suppliers were affected by Covid-19. This is a challenge because PT PQS has dozens of suppliers at home and abroad. To repeat this so that production does not stop, PT PQS Indonesia added a feature to help control supplier delivery performance. In 2018 the average delivery performance is only 60% — 70%, and the management target is 90% for local suppliers and 85% for overseas. This “Supplier Delivery Performance” feature really helps the procurement team to control the arrival of goods and provide information to suppliers related to their delivery performance, as well as being one of the index KPIs to evaluate supplier performance for one year before the Annual Vendor Meeting is held. To create a “Supplier Delivery Performance” index, PT PQS must also create SOPs or standardize them so that all relevant suppliers and procurement teams can easily understand them.<strong> </strong></p>

FOREIGN DIRECT INVESTMENT AND WAGE SPILLOVERS IN THE INDONESIAN MANUFACTURING INDUSTRY

We examine whether foreign direct investment (FDI) influences wage spillover in the manufacturing sector in Indonesia from the perspective of three recipients (dimensions): industry, province, and technology intensity. Annual data of Indonesian manufacturing firms from 2011 to 2015 is employed. Using the Fixed Effect Model, we found the spatial (province) dimension to matter the most as it consistently indicates that inward FDI depresses wages in the recipient province. When we split the observation based on firm size, FDI inflows within the same technological intensive subsectors were found to discourage wages. Only FDI inflows within the host industries support higher salaries for smaller domestic firms. The coordination between central and local governments remains essential to ensure that local companies are sufficiently competitive with foreign companies.

The Effect of Affective Organizational Commitment, Job Satisfaction, and Employee Engagement on Job Happiness and Job Performance on Manufacturing Company in Indonesia

This study examines the effect of affective organizational commitment, job satisfaction, and employee engagement on job happiness and employees' performance in a manufacturing company. The research sample is the employee with a minimum of two years of tenure at a manufacturing company. This research is quantitative research using the Structural Equation Model (SEM) method. Results show that job satisfaction, employee engagement, and affective organizational commitment play a vital role in improving employee happiness performance at working place. This study utilized a total of 275 questionnaires that were administered to respondents at a manufacturing company in Indonesia from May until July 2021. Research respondents were selected using the purposive sampling method. These findings may guide the implementation of human resources or other organization management in the manufacturing industry. For instance, they may use job happiness (mental well-being) to predict employee behaviors and then formulate recruitment policies that will help maintain employee happiness and satisfaction. This research aims to add information on human resources management science and positive managerial implications on employee happiness and performance in the Indonesian manufacturing sector.

The Importance of Value Relevance in The Indonesian Manufacturing Sector

The Importance of Value Relevance in The Indonesian Manufacturing Sector

Pengukuran Kesiapan Industri Minuman Teh Menjangkau Revolusi Industri 4.0 dengan Metode INDI 4.0

Rapid technological developments greatly affect the demand for products and services. So the industry needs to improve to maximize production achievements in order to meet market needs. The development of industry 4.0 provides an opportunity to revitalize the Indonesian manufacturing sector. Moreover, the Ministry of Industry has compiled "Making Indonesia 4.0" as a strategy and roadmap to develop industry 4.0 in Indonesia. Indonesia focuses on five main sectors for the development of industry 4.0, including the food and beverage, chemical, electronics, textile and clothing, and automotive industries. This research was conducted to determine the level of readiness of the manufacturing industry, especially the food and beverage industry at PT. Perkebunan Nusantara VIII to face industry 4.0 based on organizational and technological aspects. The measurement method used is the Indonesia Industry 4.0 Readiness Index (INDI 4.0). With these results, it can help the industry know the current level of achievement and know what needs to be done to get to the level of industry 4.0. Based on online and offline assessments carried out at the level of readiness, the people and culture aspects as well as the technology aspect have the highest level of use but are at Level 2. The technological aspect has the lowest readiness at Level 1. Overall, the company's readiness is at Level 1 (readiness stage). early) almost reached moderate readiness (Level 2).

What Determines Foreign Direct Investment in Indonesia?

This study aims to determine the determinants of foreign direct investment (FDI) in Indonesia's manufacturing sector. This study uses time-series data with 40 data observations starting from the 1st quarter of 2010 to the 4th quarter of 2020. The data analysis method employed in this research was Autoregressive Distributed Lag (ARDL) cointegration approach. The research results were that in the long run, the exchange rate and GDP growth had a positive effect, inflation had a negative effect, and gross fixed capital formation did not affect the FDI inflows in the manufacturing sector. This research implies that the government must be able to create or develop policies related to foreign direct investment to provide benefits for economic development in Indonesia. The government's efforts to control inflation have to be strengthened continuously by maintaining the availability of supply and distribution of goods. Supply continuity and smooth distribution between regions have to be further improved through the utilization of information technology and the strengthening of inter-regional cooperation. Likewise, efforts to increase economic growth have to continue to be improved by providing incentives or facilities to companies at various levels, both those that are export-oriented and those that focus on domestic sales.

Macroeconomic, Corporate Fundamentals, Systematic Risk on Firm Value: Evidence from Indonesian Manufacturing Sector

This paper aims to study the connection between the effect of macroeconomics, corporate fundamentals on systematic risk, and the firm’s value of the Indonesian manufacturing industry listed on the Indonesian Stock Exchange period 2015-2020. A total of 522 object analyses in this study with the purposive sampling method. This paper found that the direction and magnitude of the impact of firm value depend on macroeconomic measurement variables: interest rates, exchange rates, and the company’s fundamental measurement variables: leverage and capital expenditure. The paper also found that the macroeconomic positively affects firm value, and leverage has a significant positive effect on firm value. At the same time, capital expenditure shows different results in response to the firm value, that is, negatively significant. In particular, a systematic risk as a mediating variable becomes a significant and positive driver of macroeconomics and leverage on firm value. However, different results indicate that capital expenditure negatively affects the firm value if mediated by the systematic risk. The implication of this research is beneficial to enable companies and investors to make the right analytical decision in the Indonesian capital market in this pandemic covid-19 situation.JEL: E43, G10, G32

The impact of Indonesian oil price (CPI) and macroeconomics on investments in the manufacturing sector in Indonesia

Background: Indonesia consumes oil as the main energy source in the production process and as a result of the development of the manufacturing industry. Thus, investment in manufacturing stocks will be affected by oil price fluctuations and macroeconomic conditions. Changes in oil prices will affect the performance of the manufacturing sector which in turn affects manufacturing stock prices. This paper aims to examine the impact of Indonesia's oil price shocks and macroeconomic factors on stock price movements in the manufacturing sector. Methods: This study uses monthly data for the 2009-2016 period in the manufacturing sector, and 67 stocks were selected on the basis consistently available in the period of the research. The cointegration and causality technique was used in this paper; firstly we applied a unit-panel root test, Secondly, we performed a residual test to indicate whether there was cointegration among variables in the long run equilibrium, and short the short run, we used a Granger causality test. Results: The panel unit root test (both Shin and Fisher) and the Pedroni cointegration residual test show that the data is stationary at 1% level of significance, thus all variables simultaneously achieve long-run equilibrium, and in the short run, the Granger causality test shows that there is one way direction causality Conclusions: For long-term investment in manufacturing stocks, investors must consider the exchange rate, as it is also as a determining factor in influencing the movement of manufacturing stock prices, inflation, and the production index. Meanwhile, weakening of the rupiah in the short run will also determine investment conditions due to the dependency on raw materials for production from foreign sources. The price of oil as an energy source in the manufacturing sector does not have a long-term relationship with other variables.

Conservative Working Capital Policy: Can it Increase Profitability and Sustainable Growth Rate?

The objective of this study is to investigate the effect of conservative working capital policy on profitability and examine the effect of conservative working capital policy on sustainable growth mediated by profitability in the manufacturing sector in Indonesia. This study involves 133 manufacturing firms in Indonesia during the 2013-2018 period. Data are analyzed using panel data regression with random effects estimation models. The result of this study showed that conservative working capital policy, both investment and financing policy, has proven to have a positive effect on sustainable growth rate. Besides, this study also proved that profitability has a positive effect on SGR. Furthermore, there was the effect of conservative working capital policies on the level of sustainable growth through profitability. This study not only contributes to expanding knowledge about the relationship between working capital policies, profitability and sustainable growth rates, but also has relevant implications for firm managers to improve firm performance to be able to grow sustainably

Issues and Challenges in Implementing Industry 4.0 for the Manufacturing Sector in Indonesia

Industry 4.0 is a popular topic today because of its significant influence in the manufacturing sector. Issues and Challenges in implementing Industry 4.0 for the Manufacturing Sector in Indonesia examined in this study. The problem will be considered the 4.0 industrial revolution is related to the issues and challenges facing the manufacturing industry in Indonesia. The main purpose of this research is to conduct an empirical analysis of the effect of issues to challenges the implementation of Industry 4.0 for manufacturing sectors in Indonesia. The research method in this study uses a quantitative approach. The data were collected and analyzed statistically using smartPLS software. The main results of this study state that the issues in implementing Industry 4.0 have a positive and significant impact on the challenges of the manufacturing sector in Indonesia. This study results also revealed that the most dominant issues in implementing Industry 4.0 are high investment costs. On the other hand, financial constraints are the biggest challenges in implementing industry 4.0. Finally, the benefit of this research will be to encourage the manufacturing sectors in its consideration to implement industry 4.0.

Sustainability Performance and Sustainable Development Goals

The purpose of this study was to examine the effect of sustainability performance on the achievement of sustainable development goals (SDGs). This study examines each of the sustainability performance indicators consisting of economic performance, social performance and environmental performance on the achievement of sustainable development goals. The data used in this study are primary data. This study used a quantitative approach with a questionnaire survey model given to division managers in go public companies in the manufacturing sector in Indonesia. The questionnaires that can be processed are 124 respondents from 42 manufacturing companies listed on the Indonesia Stock Exchange that publish annual reports. Methods of data analysis using structural equation modeling with the help of the Smart PLS application. The results showed that the social and environmental performance that has been achieved by the company was seen as capable of supporting the achievement of the SDGs, but that the economic performance has no impact on the SDGs.

Does competition and foreign investment spur industrial efficiency?: firm-level evidence from Indonesia

This study examines the effects of market competition and foreign direct investment on the technical efficiency of firms within the Indonesian manufacturing sector using a Stochastic Frontier Analysis. We employ a firm-level panel dataset for the period of 2010–2014, covering 400 subsectors, and employing two measures of industrial concentration as proxies for market competition. The results suggest that firms operating in less competitive sectors in Indonesia experience higher technical efficiency. Additionally, foreign ownership, international activity (export-import), and firm size are positively related to technical efficiency. Such findings suggest that the efficient structure hypothesis (ESH) applies in Indonesia, as more efficient firms gain in market share as a result from dynamic competition. Foreign direct investment (FDI) via horizontal spillovers has contributed to an increase in intra industry firms’ efficiency. Nevertheless, as industrial concentration increases, the positive effects in firm efficiency from FDI and from international trade (imports and export) tend to decrease.

Energy efficiency in Indonesia\u2019s manufacturing industry: a perspective from Log Mean Divisia Index decomposition analysis

This research discusses energy intensity in Indonesia’s manufacturing sector from 1980 to 2015. The manufacturing sector is the second-largest energy-consumer in Indonesia (after the transportation sector) and one of the largest contributors to Indonesia’s output. Thus, it is important to know the energy usage performance of this sector. This study discusses the factors affecting changes in energy consumption in various subsectors of Indonesia’s industry and investigates the energy intensity across manufacturing subsectors. This paper analyses the specific characteristics of energy intensity in the manufacturing sector in Indonesia from 1980 to 2015. This has not been investigated a great deal in the past, particularly when employing the Log Mean Divisia Index II method.The overall energy intensity of Indonesia’s manufacturing sectors has seen a strong and continuous decline, with a reduction of 65% over the 35 yr, reinforced by some limited changes in industry structure towards lower intensity. Over the entire period, this reduction was dominated by increases in energy efficiency within industries, as indicated by a 62% fall in the within-industry intensive index. By contrast, the effect of moving to a less intensive industry structure was much less important (a 9% fall in the structural index). The greatest rise in energy efficiency within the industry happened before the financial crisis (from 1980 to 97). the shock of the financial crisis saw an unexpected reaction when value-added fell by 13% but energy use remained largely unchanged, implying a rise in energy intensity. From 2000 to 2015 the earlier trends resumed, but at a more subdued pace, where over this period aggregate intensity fell by 23%.

Agglomeration and Location Decision of Foreign Direct Investment (FDI) in Indonesia

Foreign direct investment (FDI) may precipitate remarkable economic growth, even in developing countries. FDI can provide financial resources, transfer technology, improve organizational and managerial practices and skills, and afford access to international markets. This paper aims to measure the relative importance of the different types of agglomeration for location decision of FDI in the manufacturing sector in Indonesia. These data are analyzed with a multinomial logit model where the dependent variable is the choice of location. It examines the determinant factors of new (greenfield) foreign direct investment in the manufacturing sector in Java Island, Indonesia. This study used unpublished micro-level data of principle licenses from the Indonesia Investment Coordinating Board (IICB), which examine 23 counties of Java Island that received manufacturing FDI in the last five years. The finding is agglomeration economies in production (both foreign-owned and domestic firms) show a significant and positive but small impact. Other variables, including facilities, and labor market conditions-anomalously in that a higher minimum wage-matter as much or more than an agglomeration of production. Because the agglomeration effect is small, it means that agglomeration economies are not the determining factor in attracting FDI. The new foreign investors not only seek counties in which foreign or domestic plants have already located but also consider other things such as the density of roads and the availability of labor.

Technology and Innovative Ambidexterity Towards Digital Infrastructure Development in Indonesia

The increasingly rapid industrial environment triggers companies to explore their potential optimally, one of them is with technology. Based on the report of the World Economic Forum (WEF) on the 2017-2018 Global Competitiveness Index, it states that Indonesia's global competitiveness index is 45th out of 140 countries. In 2030, Indonesia is targeted to become the fourth-largest economy in the world. One way is to revitalize Indonesia's manufacturing sector in the industry 4.0 phenomenon, namely through technological developments. The company must continue to innovative ambidexterity to survive in this rapidly changing environment. This technology development and innovative ambidexterity planning are prepared to avoid the complexity of developing digital infrastructure in Indonesia. Therefore, Indonesia is expected to be able to prepare plans for managing the analysis, design and development of systems to support and implement the Industrial Revolution 4.0.

DAMPAK PENGHINDARAN PAJAK, KEPEMILIKAN BLOCKHOLDER, KOMISARIS INDEPENDEN DAN KOMITE AUDIT TERHADAP NILAI PERUSAHAAN

The objective (s) of this research wasanalyzing whether tax avoidance, blockholder ownership, independent commissioner, and audit committee have any influence to firm value. This researchusessecondary data andpurposive samplingconsisting of 72 listed companiesin the manufacturing sector in Indonesia. The data was analysed in SPSS using multiple regression. The result shows that tax avoidance, institutional ownership, and independent commissionerdon’t influence significantly on firm value. Then, audit committee has positiveimpact on firm value.Simultaneously, tax avoidance, blockholder ownership, independent commissioner, and audit committee have significant impact on firm value.

RCA Analysis With Selected Product: Modified Approach Applied to Indonesian Export

Recognition of the competitiveness of various export commodities is very important to design industrial policies which is then shaping the country 's structural transformation, such as to reallocate labors to activities outside of sector with lower comparative advantage. The most popular comparative advantage measurement approach is Revealed Comparative Advantage (RCA) introduced by Balassa in 1965. Eventhough Balassa's RCA very popular, it has received a lot of criticism and improvement effort especially related to its asymmetric distribution and consistency (ranking bias). This present study introduced a new method to increase the predictive power of Balassa's RCA while maintaining the simplicity principle of calculation and convenience in dealing with data availability by selecting product included in the analysis. The study revealed that by selecting the product limited to the top 250 export (from 1,259 products in HS 4-digit), it is able to correct (restore) the position of Indonesian manufacturing sector as a competitive sector (RCA> 1) reflected by the position of the sector as top 10 export, based on export share (export value). This approach also provided a new understanding of Indonesia's export competitiveness in the Chinese market, especially after the implementation of the ASEAN-China FTA in 2010.