Heaptalk, Jakarta — The manufacturing industry has been a significant concern for many, especially in 2023, when its growth only reached 18%. In 2024, as reported by S&P Global, it contracted and dropped to 48.9.
“Purchasing Manager’s Index entering a contraction phase is something we need to be cautious about, but we hope the 9% growth in imports can help drive manufacturing activities,” said Finance Minister Sri Mulyani Indrawati during the APBN Kita press conference on Monday (09/23).
Sri Mulyani acknowledged that the contraction in the Purchasing Manager’s Index is reflected in a 2.9% decline in industrial electricity demand. Additionally, demand for cement grew slightly, which is in line with the construction activities that have begun to slow down. She said, “We hope for an acceleration in the final quarter, particularly with increased construction projects.”
Apart from Indonesia and several Asian countries, the US and European zones are also experiencing contractions. China is slightly higher but still seeing a slight decline. “In contrast, the PMI for services is expanding across the board. This illustrates the global economy’s transformation, where the services sector and the rise of digital industries will play a more dominant and significant role in all countries’ economies,” Sri Mulyani stated.
Meanwhile, Eisha Maghfiruha Rachbini, an economist from the Institute for Development of Economics and Finance (Indef), said in a press release some time ago that the key to the New Order regime’s success in boosting economic growth to 8-9%, was the improvement in the manufacturing industry, not downstream industrialization. According to Eisha, limited research shows that downstream processing can transform a country’s economy. Industrialization, particularly in the manufacturing sector, is what brings about change.
Indonesia’s industry’s growth has not yet reached a per capita income level comparable to that of developed countries, while the services industry is rising rapidly, especially in the informal sector. This has become a concern since the sector is vulnerable to economic shocks. Eisha explained that the national industry relies heavily on commodities rather than high technology. Productivity is also low, along with labor issues. Indonesia still lags behind China and Japan. The competitiveness of its workforce is also still below that of Thailand.
