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Indonesia’s Manufacturing Sector Continues to Expand, Industry Players Optimistic

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The performance of the non-oil and gas processing industry sector in Indonesia was still maintained stably in the middle of the first quarter of this year. The news provides optimism and motivation to achieve better results in the future.

Indonesia's Manufacturing Sector Continues to Expand, Industry Players Optimistic

Sourced from Indonesia.go.id, in the S&P Global report in early March 2023, they released the Indonesian Manufacturing Purchasing Managers’ Index (PMI). The report shows that Indonesia’s Manufacturing PMI remains at 51.2, indicating expansion in February.

Indonesia’s manufacturing PMI results in the second month of this year also show that Indonesia’s manufacturing sector remains strong and has been able to sustain its 18th consecutive month of expansion. This can provide motivation and encouragement for manufacturing businesses in Indonesia to improve their performance.

S&P Global reports that the manufacturing PMI of several other countries is below Indonesia, such as Myanmar with 51.1, Malaysia (48.4), Taiwan (49.0), Japan (47.7), UK (49.2), United States (47.8), Eurozone (48.5), France (47.9) and Germany (46.5).

Responding to the S&P Global report, Minister of Industry Agus Gumiwang Kartasasmita stated that the achievement of this expansion extended the period of improvement in the condition of the Indonesian manufacturing industry sector over the past 18 months, despite global economic pressures.

“This means that the level of confidence of our manufacturing industry players is still quite high or optimistic,” said Minister of Industry Agus Gumiwang Kartasasmita in Jakarta, Wednesday (1/3/2023).

On a different occasion, the Head of the Ministry of Finance’s Fiscal Policy Agency, Febrio Kacaribu, added that the resilience of Indonesia’s manufacturing sector was driven by strong domestic demand.

“The supply chain is improving in terms of reduced delivery times due to more efficient logistics performance,” he said, Friday (3/3/2023).

Data from the Fiscal Policy Agency stated that input purchasing activity in February 2023 was recorded at the level of 52.8. This means an increase compared to the previous month which was at the level of 52.3.

However, export demand is still experiencing a contraction even though there has been an increase. In this case, the government will continue to try to control the inflation rate.

Optimistic business people

The Minister of Industry said that the performance of the national manufacturing industry was still showing good results. This can be seen from the results of the Industrial Confidence Index (IKI) published by the Ministry of Industry for the period February 2023, which reached 52.32.

The index experienced a significant increase of 0.78 points compared to January 2023. Then, the percentage of business actors’ pessimism decreased, from 13.60 percent in January 2023 to 10.81 percent in February 2023. Meanwhile, 24.90 percent of business actors stated business conditions are stable over the next six months

“I am sure that our manufacturing industry will remain expansive in line with the gradual improvement in global geopolitical and economic conditions. Besides that, it is supported by government policies in an effort to create a conducive business climate,” said the Minister of Industry, Agus Gumiwang Kastasasmita.

Agus emphasized that his party is determined to continue to focus on encouraging natural resource processing activities in the country. This step towards downstreaming the industry has proven capable of having a broad positive impact on the national economy, such as increased investment, employment and exports.

“We will continue to pursue downstream and deepening of the manufacturing structure, because it is part of efforts to strengthen the supply chain. This will also boost our industrial competitiveness. The government has emphasized that the downstream process will not only be carried out in the mineral and coal mining sector, but also target other sectors such as agriculture,” he added.

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