Indonesia’s export performance has been slowing down since 2012, partly due to the decline in commodity prices. In 2014, export declined by 3.4% following the past 3 years trend of negative growth. However, the current government has planned to boost export growth to 12.2% by 2019. Given the deteriorating commodity prices, Indonesia’s government needs to find a new source of growth, i.e., the non-primary sectors including the manufacturing sector.

This study found that there are 1122 combinations of sectors and regions at 2-digit level having supply potentials, i.e., RCPA is greater than one. These 1122 combinations of sectors and regions are mapped to world demand growth as an indicator for demand potential. The map shows 1070 out of these 1122 combinations of sectors and regions have supply and demand potentials (referred to as having export potential). Given that 2-digit classification is often too broad, a more detailed sectoral disaggregation, at 4-digit level will provide a more detailed picture of the potentials. Based on 4-digit level disaggregation, we found 5465 combinations of sectors and regions have supply potential with 3013 combinations of sectors and regions having both supply and demand potentials.

When those sectors that have export potential are compared to actual export performance, we found that 683 combinations of products and regions at 4-digit level performed below potential. We also found a possible sunset industry. Possible sunset industry is defined as industries having RCPA Index greater than one with negative demand growth for 2010-2013 but positive for 2004-2009: Industrial Equipment of Children Games and Toys (ISIC 3694) with 16 regions producing these products.