The Indonesian Manufacturing Purchasing Managers’ Index (PMI) reached 50.9, surpassing Germany, Japan, and Australia, indicating the manufacturing sector is recovering from the pandemic’s impact.
Heaptalk, Jakarta — Throughout 2022, the manufacturing industry sector in Indonesia has proven to consistently perform at an expansive level. This is reflected in the achievement of the Indonesian Manufacturing Purchasing Managers’ Index (PMI) which closed at 50.9 in December 2022, higher than the previous month’s 50.3.
Based on a study released by S&P Global, Indonesia’s Manufacturing PMI has remained in an expansive phase for 16 consecutive months since September 2021. This positive performance shows that the national manufacturing industry improved and recovered after being affected by the covid-19 pandemic and amidst the uncertain global economy due to the threat of recession.
Remarkably, that rate surpassed Germany’s Manufacturing PMI (47.4), Japan’s (48.8), Australia’s (50.4), Myanmar’s (42.1), Netherlands’ (48.6), France’s (47 .4), South Korea (48.2), United Kingdom (44.7), United States (46.2), and Eurozone (47.8).
Minister of Industry (Kemenperin) Agus Gumiwang Kartasasmita is optimistic that the roar of the engines of the manufacturing industry sector in Indonesia will still rumble in 2023. This means that productivity is running well to meet the needs of the domestic and export markets. He said, “We believe that the performance of our manufacturing industry will grow even more in 2023, aligned with the various strategic policies being prepared by the government.”
Agus conveyed that his party is currently developing a strategy to address labor issues, one of which is layoffs in labor-intensive industrial sectors, spanning the textile, footwear, and furniture industries. The stimulus policies include a limited import ban, adjustments to inspections from post-border to the border, and flexibility in working hours. The ministry will implement the strategy at least until conditions return to normal.
In addition, the incentive policy for electric vehicles is being finalized. “This policy was taken to accelerate the development of electricity-based industries in Indonesia. Not only cars, not only motorbikes but also buses. That requires one condition, namely the availability of facilities. It means, the company must have a factory in Indonesia,” said Agus.
Investment realization to increase by 7%
Investment realization in the manufacturing industry is expected to reach Rp450 trillion to Rp470 trillion in 2023, an increase of 7% compared to the 2022 projection of Rp439.33 trillion. Agus delivered, “At the same time, the export value of the non-oil and gas processing industry in 2022 is projected to reach US$210.38 billion. In 2023 it is targeted to be US$225 billion to US$245 billion.”
In addition, growing investment in the industrial sector will also boost labor absorption. In 2022, total employment is estimated to reach 19.11 million people, while in 2023 there will be 19.2 million to 20.2 million people.
“Therefore, the government is determined to strengthen downstream in the manufacturing industry sector. To date, the downstream sector has provided clear evidence of a multiplier effect on the national economy, including increasing the added value of domestic raw materials, attracting investment in the country, generating large foreign exchange from exports, and increasing the amount of labor absorption,” said Agus.
Responding to the Indonesian Manufacturing PMI, Economics Associate Director of S&P Global Market Intelligence Jingyi Pan said that the PMI in the manufacturing sector is heading in a better direction. The improvement was the result of an increase in demand that triggered an increment in production. It also hoists purchasing activity and also job creation.
“Faster expansion in output and sales as well as reduced price pressures are expected improvements,” said Jingyi. In the report, Indonesia’s manufacturing production experienced a faster expansion in December. This was driven by increased demand for goods produced in Indonesia. This led to a spike in new orders in December.
