Indonesia’s Factory Boom Is Real, Just Don’t Ask Where the Jobs Came From
Indonesia’s export and factory boom sounds great, until you see what’s really driving it: relocation, wage cuts, and political spin.
Indonesia’s communications team has perfected the art of the good news montage. Each week brings another headline bursting with optimism:
Exports are up,
Factories are opening,
Foreign investors are thrilled.
You can almost hear the triumphant music swelling underneath. It’s economic cinema that’s carefully edited, color-graded, and soundtracked to mask the awkward bits that ended up on the cutting-room floor.
The September export “surge,” clocking in at 11.4 percent growth, looked impressive enough to earn applause. Then came the encore: twenty-seven new factories in Central Java promising 130,000 jobs. The headlines practically wrote themselves. Yet behind the curtain, the narrative starts to blur. Those factories are not the dawn of new industry but the rearrangement of existing ones; plants quietly uprooted from higher-wage areas and replanted where labor is cheaper and questions fewer.
The good news drops first. The harder truths like layoffs in Tangerang, stagnating wages, relocations sold as progress, arrive late, faintly reported, already overshadowed by the next upbeat headline. The result is a national economy that appears to rise on paper while shuffling the same deck of cards in reality.
Growth! (But in a “We Just Moved It” Kind of Way)
According to the official narrative, Central Java is buzzing.
Hundreds of hectares are being snapped up like discounted land at a BUMN fire sale.
Investment announcements are being churned out faster than the factories themselves.
Headlines glow with the promise of tens of thousands of jobs.
But here’s what they don’t emphasize. These “new” jobs? They’re mostly old jobs with new addresses. Large parts of this boom are the result of industrial migration, not industrial creation. This isn’t new economic growth.
Take PT Victory Chingluh, a Nike supplier, now downsizing in Tangerang. Up to 3,000 jobs gone. Simultaneously, factories go up in Central Java, and surprise! The jobs reappear. Adidas-linked suppliers are making similar moves, some heading to Brebes, others to Cirebon. The public line is that these moves are “strategic.” The subtext is wage gaps. Massive ones.
In Banten, a factory worker might make over Rp5 million a month.
In Central Java, it’s often under Rp2.5 million.
Same sewing line. Same shoes. Less than half the pay.
And then there’s that “130,000 jobs” number. The figure is tied to 27 factories, many of which are still half-poured concrete. But when there’s a shovel, a banner, and a camera crew, the narrative takes care of itself.
So while Central Java glows under the spotlight, spare a thought for workers in West Java and Banten.
Exports Up, Context Down: How to Win the News Cycle with Numbers
Indonesia’s September exports hit US$24.68 billion, up 11.4% year-on-year. The announcement was delivered with all the subtlety of a fireworks show, as officials raced to claim credit like kids fighting over who pressed the elevator button.
Ministers issued LinkedIn posts. National TV presenters spoke of “resilience” and “structural improvements” with the urgency of a sponsored segment. And just like that, a complex global trade statistic was smoothed into a feel-good bullet point. Strong fundamentals. Trust the process.
Except, no one paused to mention the parts that matter.
Most of the uptick was driven by commodity prices, not volumes. Precious metals and palm oil propped up the numbers, while the usual suspects like coal, rubber, and palm, remained in their eternal tug-of-war with global demand and weather.
There was a front-loading spike in August thanks to U.S. tariff policy changes. Exporters rushed shipments out early, meaning September’s numbers rode the leftover momentum.
Seasonality exists. It turns out the world doesn’t run on Indonesia’s press calendar. September often sees shipping volume climb ahead of year-end retail. If you’ve ever heard of Christmas, you’ve basically solved this mystery.
So what’s changed? Almost nothing. But the number is technically up from last year. And that’s good enough for a ribbon, a quote, and 90 seconds on the nightly news.
It’s the economic version of standing on a chair and calling yourself tall. Yes, you’re higher up. No, it’s not the same thing.
UMP, Ormas, and the Hidden Economics of “Let’s Just Go to Central Java”
No executive wakes up and decides to move a factory because they’ve suddenly developed a soft spot for sunsets in Semarang. This isn’t about charm, or even long-term strategy. It’s about saving money. A lot of it.
Indonesia’s 2025 wage gap makes that decision almost embarrassingly easy.
In Tangerang City, the minimum wage (UMK) is Rp5.07 million.
In Central Java, the provincial minimum wage (UMP) sits at Rp2.17 million.
That’s a 57 percent cost reduction just by switching provinces. You don’t need an MBA to see the appeal.
For companies operating on tight margins like apparel, footwear, and textiles, this is the difference between staying afloat and packing up the machines in the middle of the night.
But payroll isn’t the only factor. Enter the soft costs. In Banten and parts of West Java, industrial operations are often taxed informally by mass organizations (Ormas) that moonlight as local enforcers, toll collectors, and general-purpose muscle. Add in mysterious administrative “fees,” slow permitting, and political gatekeepers, and suddenly your business model feels more like a hostage negotiation.
When these firms leave, officials act surprised, as though they hadn’t noticed the slow rot. But businesses have been calculating these costs for years. They just finally reached the exit.
Central Java, by contrast, offers lower wages, fewer hands to shake, and local governments eager to advertise their openness.
Yes, the land may flood.
Yes, parts of it are subsiding.
Yes, the jobs being created often don’t meet living wage thresholds.
But in the spreadsheet, the region scores high. And that’s the only column that seems to count.
So companies move. Workers earn less. Headlines claim victory. And the structural problems that drove it all? They remain off-camera.
Disconnected Dots and the National Gaslight Strategy
Every press release tells a slice of the truth. Nothing outright false, just… curated. A little off-camera lighting. Some carefully staged framing. Each headline is technically accurate, and that’s exactly what makes the strategy work.
Exports are up? Yes, they are. But not because the economy suddenly discovered a secret growth formula. The real reason is less glamorous: commodity prices swung up, and a U.S. tariff change led to front-loaded shipments in August. September simply caught the tailwinds.
Factories booming in Central Java? Also true. But most of them didn’t fall from the sky. They were moved from Tangerang, from Bekasi, from West Java. Because those places have higher wages, more “fees,” and ormas playing tollbooth with supply chains.
Jobs created? Sure. But we don’t talk about the jobs destroyed to make room for them. Like the 2,800 workers let go from a Nike supplier in Tangerang.
The social, economic, and human costs are obscured, spread out, and underreported. They’re downplayed as “adjustments” or “strategic shifts.” Never “layoffs.” Never “offloading the burden onto the poorest.”
But the narrative is slipping. In a world of social media, it only takes one worker to film the empty factory floor and post it. Now the gap between the official story and lived reality is no longer invisible. And when people start connecting the dots on their own…
Indonesia has everything it needs to succeed. It doesn’t lack for talent, resources, or potential. But potential only matters when it’s matched with policy that’s grounded in reality. Growth isn’t something you declare. It’s something you earn. And right now, a lot of what’s being celebrated as progress is simply theatre.
You can’t build a resilient economy by chasing the lowest wages in the country. And you can’t claim industrial expansion when you’re just rearranging factory equipment and hoping no one notices the moving trucks. A real plan would confront the hard questions:
Why wages remain disconnected from living standards,
Why investment flees places like Tangerang,
Why local enforcement is often outsourced to whoever has the biggest flag and loudest motorbike.
It’s easier to sell the illusion of growth than to do the difficult work of making it real. But illusions fade. People talk. Workers post videos. Communities notice what’s gone.
Until we’re willing to deal with the root causes rather than polish the symptoms, we’ll keep getting more of the same.
At StratEx - Indonesia Business Advisory we help companies and investors decode the headlines and navigate the policy terrain. Contact us to cut through the noise and see what’s actually shaping Indonesia’s economy.