Lesson video

Hello and welcome.

My name is Ms. Harrison.

I'm so excited to be learning with you today.

Today's lesson is called Changing Industrial Structure of Indonesia.

Grab everything you might need for today's lesson and let's begin our learning.

By the end of today's lesson, you'll be able to explain how Indonesia's economic sectors have changed since the 1990s.

Before we can begin this learning, we need to define the keywords that we'll be using throughout today's lesson.

The keywords in today's lesson are primary sector, secondary sector, and tertiary sector.

Primary sector: this is the parts of an economy that involves using natural resources directly from the land or sea.

For example, agriculture, fishing, forestry and mining.

Secondary sector: this is the part of an economy that involves manufacturing goods from raw materials or other manufactured goods.

For example, factory work, construction and food processing.

Tertiary sector: this is the part of an economy that provides services to people and businesses rather than goods.

For example, teachers, doctors, shop workers, and delivery drivers.

Now that we've defined these keywords, we can begin our learning.

The first question we are going to explore in today's lesson is how has Indonesia's economy grown? GDP or gross domestic product measures the total value of everything a country produces in a year.

It shows how much money a country earns, and it is a key indicator of economic health.

Since the 1990s, Indonesia's GDP has risen rapidly reflecting a strong economic development, urbanisation and growing industries such as manufacturing, technology, and services.

However, this growth hasn't always been steady.

Global and regional shocks have disrupted progress at times.

For example, the Asian financial crisis in 1997 to 1998 caused a sharp decline in growth leading to major reforms in Indonesia's financial and political systems. More recently, events like COVID-19 pandemic and changes in global commodity prices have also affected Indonesia's economy.

Despite these challenges, Indonesia continues to grow, showing resilience and an increasing role in the global economy.

From the 1970s to 1997, Indonesia's economic growth was largely driven by investment in infrastructure and manufacturing.

This period saw major development in roads, ports, and industry helping to modernise the economy and boost exports.

After the Asian financial crisis, Indonesia recovered and entered a new phase of steady growth.

From the 2000s to present, the country's experienced an average annual GDP growth rate of nearly 5%.

By 2023, Indonesia's GDP reached 1,370 billion US dollars, making it one of the largest economies in Southeast Asia and emerging force in the global markets.

This long-term growth reflects Indonesia's economic transformation despite occasional setbacks caused by global and regional shocks.

I would like you to identify the event that negatively impacted Indonesia's GDP in 1997.

Was it A, the Asian financial crisis? B, COVID to 19 pandemic? C, FDI by TNCs? Or D Indonesian Independence? Pause here whilst you have a think and press play when you're ready to continue.

Fantastic.

The answer is A the Asian financial crisis.

Well done.

This graph shows how three different economic sectors have contributed to Indonesia's growth over time.

The sectors are the primary, secondary, and tertiary.

Over time, Indonesia's economic structure has shifted as the country has developed.

The primary sector, which includes agriculture, fishing, and mining, has seen its contribution to GDP decline as fewer people rely on farming and more work in industry and services.

The secondary sector made up of manufacturing and construction experienced growth in the 1980s all the way to the 2000s, and this was fueled by industrial expansion, foreign investment, and infrastructure development.

From 2010 onwards, the tertiary sector, which includes services like finance, education, retail, and tourism became the largest part of the economy, reflecting a more developed and urbanised country.

As these changes took place, Indonesia's GDP per capital also grew, showing them not only was the economy expanding, but individual incomes were also rising, lifting millions of people outta poverty and improving quality of life.

Which economic sector made the biggest contribution to Indonesia's GDP in the 1980s, 1990s and 2000s was it A, the primary sector? B, the secondary sector? C, the tertiary sector? Or D, quaternary sector? Pause here whilst you have a think and press play when you're ready to continue.

Fantastic.

The answer is B, the secondary sector well done.

I would now like you to fill in the gaps to correctly complete this paragraph about the growth in Indonesia's economy.

Pause the video here whilst you have a read and attempt this task and press play when you're ready to continue.

Fantastic.

Let's check our answers.

Your answer should read like this.

One way of measuring economic growth is using GDP, which is a measure of how much money a country makes per year from everything it produces.

Indonesia's economy has developed rapidly since the 1990s and in 2023 it was worth 1,370 billion US dollars.

The contribution of Indonesia's primary sector to its economy has declined throughout the period 1990 to present.

During the strongest period of growth in the 2000s, the biggest contribution came from the Indonesia secondary sector.

Well done if you managed to get that correct, you've done brilliantly.

We're now going to explore our second question of today's lesson.

How have Indonesia's economic sectors changed? A country's economy is made up of four sectors, the primary sector: agriculture, mining, forestry, and fishing.

The secondary sector, this is: manufacturing, construction, and industry.

The tertiary sector, which is services such as banking, retail, transport and tourism.

And the quaternary sector, this is knowledge-based industries such as IT and research and development.

Which of the following best describes the secondary sector of the economy is it: A, businesses that extract natural resources such as mining and farming? B, businesses that manufacture products from raw materials or from other manufactured products? C, businesses that provide services such as banking and retail? Or D, businesses based on information and knowledge such as research and development of new products? Pause the video here whilst you have a think and press play when you're ready to continue.

Fantastic.

The answer is B, businesses that manufacture products from raw materials or from other manufactured products.

Well done if you've got that correct.

Since the 1990s, there have been major changes in how people in Indonesia are employed across three main economic sectors, the primary, secondary, and tertiary.

In the 1990s, the majority of people worked in primary sector, mainly in agriculture, fishing and forestry, but as the economy grew and industrialised, the numbers steadily declined.

Employment in the secondary sector, including manufacturing and construction, increased during the 1990s and 2000s.

As Indonesia built factories, roads, and export industries.

From the 2010s to present, the tertiary sector has seen the most growth.

More people now work in services such as retail, education, health, finance, and tourism.

This shift reflects Indonesia's transformation into a more urban service-based economy.

These changes show how economic development not only changes what a country produces, but also where people work.

The type of graph on your screen is called an area chart.

It's often used to show how different economic sectors contribute to the whole, in this case, Indonesia's GDP over time.

The entire chart always adds up to 100% with each coloured area representing a different sector.

In 1991, we can read the chart by looking at the differences between the lines.

The tertiary sector contributes to 36% of GDP.

The secondary sector made up 17%.

This is a difference between 53% and 36%.

The primary sector, which is agriculture, fishing, and mining, contributed the remaining 47%, which is 100 minus 53%.

This shows that in 1991, the primary sector was still the largest part of Indonesia's economy, but the tertiary sector and secondary sectors were starting to grow.

What contribution did the primary sector make to Indonesia's GDP in 2023? Was it A 100%, B, 71%, or C, 29%? Pause the video here whilst you have a think and press play when you're ready to continue.

Fantastic.

The answer is C 29%.

We came to this answer by subtracting 71 from 100.

Well done on this task.

You've done brilliantly.

Agriculture, parts of the primary sector was once the backbone of Indonesia's economy.

And now employs only about 28% of the workforce.

Even though it still plays an important role, Palm oil alone generates around 3.

5% of Indonesia's GDP.

So why are fewer Indonesians working in farming? One reason is mechanisation.

Farming today uses more machines and technology, so it needs fewer workers to produce the same or even greater output.

Large plantations like those producing palm oil are often highly efficient, relying on a smaller number of labourers.

At the same time, economic development has created more job opportunities in industry and services, especially in cities.

Sectors like manufacturing, transport, retail and technology often offer higher pay, more stable work and a better standard of living, attracting young people away from rural farming.

As a result, even though agriculture still contributes to the economy, especially through exports like palm oil, it no longer employs the majority of the population.

Palm oil plantations in Indonesia cover vast areas of land making the country one of the world's top producers.

However, despite their size, these plantations do not require many workers.

As agriculture becomes more mechanised, fewer people are needed to plant, harvest and manage the crops.

In the past, many Indonesians farmed small plots of land to grow food for their families and local communities, but today, that way of life is becoming less common.

Most Indonesians now work for wages in the secondary sector like factories and industry or the tertiary sector like services, like retail, transport, education and tourism.

These sectors offer more stable incomes, especially in urban areas and reflect the country's shift towards a modern industrialised economy.

This change shows how economic development and mechanisation are transforming not just the economy, but also the daily lives and jobs of millions of Indonesians.

In 1990, nearly 50% of Indonesian workers were farmers.

What percentage worked in agriculture in 2023? Was it A, 58%? B, 48%? C, 38%? D, 28%? Pause here whilst you think and press play when you're ready to continue.

Excellent, the answer is D, 28%.

Well done.

In 1983, the primary sector contributed to 24% to Indonesia's GDP.

What had that dropped by in 2023? Was it A, a fifth? B, a quarter? C, a third? Or D, a half? Pause here whilst you have a think and press play when you're ready to continue.

Excellent.

The answer is D, a half well done.

The number of Indonesia's working in the industrial sector has increased steadily as the country's economy has developed.

Foreign car companies have expanded production in Indonesia, building factories and creating thousands of jobs in automotive manufacturing.

This has turned Indonesia into a key play in the global car industry, especially within Southeast Asia.

Indonesia has become a major hub for textile and clothing production, supplying global fashion brands.

The country's large, relatively low cost workforce makes it attractive for international companies who are looking to outsource manufacturing.

This growth in industry has provided millions of jobs helping people move out of low paying agricultural work and move into more stable, better paid employment, contributing to urbanisation and rising living standards.

Toyota is a leading example of foreign company investing in Indonesia's manufacturing sector.

As one of the world's largest car manufacturers, Toyota has significantly expanded its operations in the country.

Toyota Indonesia now produces around 300,000 vehicles each year with approximately 250,000 of those vehicles exported to over 100 countries worldwide.

This makes Indonesian an important part of Toyota's global supply chain and highlights the country's growing role in automotive manufacturing.

Toyota's investment brings more than just economic output.

It creates jobs, strengthens technical skills and supports the development of local industries and suppliers.

It also boosts Indonesia's reputation as a regional manufacturing hub, attracting further foreign direct investment.

This case shows how global companies can support industrial growth exports and economic development in emerging economies like Indonesia.

This graph shows how much money Indonesia's manufacturing industries have made since 1983.

It started at 10 billion US dollars and has grown to 256 billion US dollars in 2023, which is a huge difference.

Since the 1990s, which of these have increased in Indonesia is A, the percent employed in industry? Or B, money made by industry? Pause the video here whilst you take a closer look and press play when you're ready to continue.

Fantastic.

The answer is A, the percent employed in industry and B, the money made by industry.

Well done in this task.

You've done brilliantly.

Indonesia service sector known as the tertiary sector has seen strong and steady growth in recent years.

It includes a wide range of industries such as banking, tourism, retail, transport, education, and healthcare.

Today, services make up around 43% of Indonesia's GDP, making it the largest contributor to the economy.

As the population became more urban and incomes rise, the demand for financial services, shopping and entertainment and travel continues to grow.

Tourism also plays a key role with millions of international visitors each year supporting hotels, restaurants, and local businesses, especially in destinations like Bali.

This shift towards services reflects Indonesia's transformation into a modern, consumer-driven economy, offering more opportunities in professional and customer-focused jobs.

Tourism is a major part of Indonesia's growing tertiary sector, contributing significantly to jobs, income and international trade.

One of the country's top destinations is the island of Bali, which remains a global tourism hotspots.

In 2024, Bali alone attracted 6.

3 million international visitors, boosting local businesses, hotels, restaurants, and cultural attractions.

Tourism supports millions of jobs across Indonesia and brings in valuable foreign exchange, helping to drive growth in the service sector.

As tourism expands, it plays an increasingly important role in regional development, especially in areas beyond major cities.

Highlighting the importance of sustainable and inclusive tourism practises.

Lucas has asked, I wonder if other islands in Indonesia are becoming more popular for tourists too? The answer is yes.

While Bali remains most popular tourist destination, other islands in Indonesia are becoming increasingly popular with tourists too.

The government has promoted places like Lombok, the Komodo National Park and Lake Toba in Sumatra as part of its 10 new Balis initiative designed to spread tourism more evenly across the country.

These areas of unique experiences like volcano hikes, diving spots, cultural heritage sites, and unspoiled beaches attracting both domestic and international travellers looking for something different from Bali.

Tourism in these regions not only brings an income, but also helps create jobs and improve infrastructure, especially more rural or less developed areas.

The quaternary sector, Indonesia's IT sector and digital economy are expanding rapidly and they now contribute to 4% of the country's GDP.

This growth is being driven by advancements in e-commerce, financial technology, and renewable energy innovation with a young tech savvy population and increasing internet access, digital platforms are transforming how Indonesia's shop, work and do business.

Startups and major companies alike are investing in areas like online payments, logistics, and green technology.

This fast growing sector is not only creating highly skilled jobs, but also positioning Indonesia as a regional tech leader in Southeast Asia.

Izzy has said, "The quaternary sector, that's economic activities based on knowledge, research, technology and information, isn't it?" Yes, Izzy is correct.

True or false? Because Indonesia is not a high income country, most Indonesians still work in agriculture.

Pause the video here whilst you decide if this statement is true or false and press play when you're ready to continue.

Excellent.

The answer is false.

I would now like you to explain why? Pause the video here and press play when you're ready to continue.

Fantastic.

The reason why the statement is false is because agriculture was once Indonesia's economic backbone, but its share of the workforce has declined since the 1990s.

Today, industry and services dominate Indonesia's economy with manufacturing, finance, tourism, and digital sectors growing.

Well done if you managed to explain that correctly, you've done brilliantly.

The quaternary sector in Indonesia mainly consists of A, farming and mining? B, research, IT and financial services? C, manufacturing and industry? D, transport and tourism? Pause here whilst you decide and press play when you're ready to continue.

Excellent.

The answer is B, research, IT and financial services.

Well done on this task.

I would now like you to work out what percentage of the Indonesian workforce was employed in the primary sector in A, 1991 and B, 2023? Pause the video here whilst you attempt this task and press play when you're ready to continue.

Excellent.

Before we check our answers, I would like you to do one more task.

I would now like you to work out what percentage of the Indonesian workforce was employed in the secondary sector in A, 1991 and B, 2023? Pause here whilst you attempt this task and press play when you're ready to continue.

Excellent.

Let's check our answers.

For the first question I asked you to work out what percentage of the Indonesian workforce was employed in the primary sector for 1991? It was 47% and for 2023 it was 29%.

Well done if you managed to get that correct.

And the second question I asked you to complete was what percentage of the Indonesian workforce was employed in the secondary sector in 1991? And that was 17% and in 2023, that was 24%.

Well done on that task.

I would now like you to complete the table below on Indonesia economic sectors.

I would like you to use facts and figures in describing the change.

We're going to focus on three economic sectors, the primary sector, the secondary sector, and the tertiary sector.

I want you to describe it and then say how it has changed.

Pause the video here whilst you attempt this task and press play when you're ready to continue.

Excellent.

Let's check our answers.

For the primary sector, the description, the parts of an economy that involves using natural resources directly from the land or sea.

For example, agriculture, fishing, forestry mining.

How it's changed? This sector's contribution to GDP has halved since the 1980s, it was now 12%.

From 47% of the workforce in 1991, the primary sector now employs 29% of Indonesians.

Palm oil production earns 3.

5% of GDP.

The secondary sector, the parts of an economy that manufactures goods from raw materials or other manufactured goods.

For example, factory work, construction, and food processing.

How has it changed? From 17% of the workforce in 1991, the secondary sector now employs 24% of Indonesians and contributes around 40% of GDP.

The value of manufacturing has increased from 10 billion US dollars in 1983 to 256 billion US dollars in 2023.

The tertiary sector, this is the part of an economy that provides services to people and businesses rather than goods.

For example, teachers, doctors, shop workers and delivery drivers.

How it's changed? Services contribute to around 43% of Indonesia's GDP, and in 2023, 49% of the workforce was employed in the tertiary sector.

Tourism is important in Indonesia, for example, Bali attracted 6.

4 million visitors in 2024.

Well done on this task.

You've done brilliantly.

We're now going to explore our final question of today's lesson.

How has manufacturing industry stimulated growth? Manufacturing industry can boost economic growth: Factories need workers, so manufacturing creates jobs.

Factory workers have more money to spend, more spending boosts economic growth and more demand for manufactured goods and for services, and then this leads to more factories needing workers, so manufacturing creates jobs and then factory workers need more money to spend and then more money spending boosts economic growth, and then this leads to more economic growth means more tax revenue for the government, which means more spending by the government means better infrastructure and better infrastructure attracts more investment into manufacturing and the cycle is repeated.

Manufacturing plays a key role in driving Indonesia's economic development with wide reaching impacts across the economy.

It increases export earnings by producing goods that can be sold overseas, bringing valuable foreign currency.

It also encourages innovation and technology helping industries become more competitive.

As factories grow, there are more skilled workforce, attracting more foreign investment and improving local productivity and manufacturing also is a strong multiplier effect.

As it grows, it supports other industries like transport, logistics, and services.

To support manufacturing, governments often invest in infrastructure like roads, ports and energy, which benefits the wider economy.

At the same time, growing domestic demand for manufactured goods supports further industrial expansion.

Together, these factors make manufacturing a powerful engine for long-term economic growth.

Why might people prefer to work in manufacturing than agriculture is A, less pollution? B, High wages? C, longer hours? Pause here whilst you have a think and press play when you're ready to continue.

Excellent.

The answer is B, higher wages.

Well done.

How is manufacturing in Indonesia changing? Indonesia's manufacturing sector has undergone major transformation over the past few decades, becoming key driver of Indonesia's economic development.

In the 1990s, manufacturing was largely focused on low cost labour intensive goods like textiles, footwear, and food products.

These industries helped fuel early growth and provided jobs for millions of Indonesians.

Since then, the value of manufacturing has steadily increased.

Today the sector contributes to more than 19% of Indonesia's GDP and continues to expand.

This growth reflects a shift towards high value industries such as automated manufacturing, electronics, chemicals, and metal processing.

Foreign investment has played a major role in the shift.

Global companies, especially from Japan, South Korea and China have built factories in Indonesia drawn by its large workforce, strategic location, and growing domestic market.

At the same time, technological changes reshaping how manufacturing works.

Many factories are adopting automation, digital systems, and clean energy, making production more efficient and sustainable.

This is helping Indonesia compete globally while also addressing environmental concerns.

Indonesia's also focusing on building a skilled workforce to support more advanced industries.

Education and training programmes are being developed to help workers move into higher paid tech jobs.

In addition to exports, growing domestic demand for manufactured goods from electronics to cars is helping the sector to thrive.

As Indonesia's middle class expands, so does the need for locally made high quality products.

Overall manufacturing in Indonesia is becoming more diverse, innovative, and future focused.

Positioning the country's a major industrial power in the region.

True or false? Most Indonesians now work in the tertiary sector, so investment in the secondary sector is now declining.

Pause here whilst you decide if this statement is true or false and press play when you're ready to continue.

Excellent.

The answer is false.

I would now like you to explain why? Pause here and press play when you're ready to continue.

Fantastic.

The reason why this statement is false is because although only 24% of Indonesians work in the secondary sector, it still contributes around the same as the tertiary sector to GDP around 40%, and the government is investing in making Indonesia 4.

0 aiming to increase automation and new technologies such as AI.

Well done if you managed to explain that correctly.

I would now like you to use these graphs in your answer and suggest how manufacturing has been important in stimulating Indonesia's economic growth.

Pause here whilst you attempt this task and press play when you're ready to continue.

Excellent.

Let's check our answers.

Your answer may have included some of the following points.

Graph A shows that Indonesia's GDP began to grow in the 1990s and dropped around 1997 and then increased rapidly in the 2000s and again in the 2010s and 2020s.

Graph B shows that money made by manufacturing since the 1990s follows a very similar trend.

While GDP is much higher than manufacturing value, 1,370 billion US dollars in 2023 compared to 250 billion US dollars for manufacturing.

That does suggest that manufacturing has been a key part of Indonesia's economic growth since the 1990s.

Manufacturing creates jobs which pay higher wages than jobs and farming, which meant that lots of Indonesians left farming jobs to work in factories.

Their increased income could be then be spent on buying products and services.

This increased demand for more manufacturing and for more services, which led to economic growth.

Indonesia would also earn more from exports and would've attracted foreign investment too.

Like Toyota for car manufacturing.

This would also increase economic growth.

Well done if you managed to explain that correctly.

You've done brilliantly.

We've now come to the end of our learning in changing industrial structure of Indonesia.

Before we finish this lesson, let's summarise everything we've learned in today's lesson.

Over the past few decades, employment in Indonesia has shifted dramatically as the economy has developed.

In the past, the majority of Indonesians worked in the primary sector, especially in agriculture, fishing and forestry.

Farming was one the main source of income for millions of families and the backbone of the economy.

However, as the country has urbanised and industrialised employment in the primary sector steadily declined.

Today, most Indonesians now work in the tertiary sector, which includes services such as retail, finance, education, healthcare, and tourism.

This reflects a broader global trend where service-based economies grow as countries develop.

A major factor behind this transformation has been the rise of the manufacturing sector.

Manufacturing has played a key role in Indonesia's rapid economic growth, especially since the 1980s and 1990s.

It has provided millions of jobs, often offering better wages and more stability than agricultural work.

Industries such as automotive production, textiles and electronics and food processing have grown supported by foreign investment, improved infrastructure, and rising global demand.

As more factories opened, more people moved from rural to urban areas, helping to fuel urbanisation and shift the structure of the workforce.

Manufacturing also helped build the foundation of Indonesia's and modern economy, creating links with global supply chains, encouraging exports and helping to drive growth in other sectors like transport, logistics, and education.

Now with more people employed in services and industry, Indonesia's workforce is more diverse, skilled, and connected to the global economy than ever before.

Well done on today's lesson.

You've done brilliantly and I look forward to learning with you again very soon.