Using a data envelopment analysis (DEA) this articles measures the efficiency of Indonesian manufacturing for 1995. The findings suggested that it is more efficient in the metal sector; while it is less efficient in the food sector. In each sector, it is more efficient for larger companies in chemical and metal sectors that are generally thought to be highly capital intensive. In addition, foreign-affiliated companies are also more efficient. We suggest that heavy industry with foreign-affiliated companies have played a key role in the rapid growth of Indonesian economy before Asian crisis. Lastly, empirical evidence shows that the labor productivity negatively affects inefficiency in almost all of the sectors.
