Indonesian Manufacturing PMI Still Drops In October, Ministry Of Industry Blames Permendag 8 Of 2024

JAKARTA - The Ministry of Industry (Kemenperin) has opened its voice regarding the Indonesian Manufacturing Purchasing Manager's Index (PMI) which contracted four consecutive months. The S&P Global report noted that the Indonesian Manufacturing PMI was at the level of 49.2 in October 2024 or the same as the previous month.

Responding to this, Spokesperson for the Ministry of Industry Febri Hendri Antoni Arif admitted that his party was not surprised if the Indonesian manufacturing PMI was still contracting.

He said, as long as there is no significant policy to support the manufacturing sector and protect the domestic market, such as the revision of the Minister of Trade Regulation (Permendag) Number 8 of 2024, it will be very difficult for PMI manufacturing to get out of the contraction zone.

"The implementation of Permendag Number 8 of 2024 is one of the reasons for the decline in manufacturing performance, because the Indonesian domestic market is flooded with imported products," said Febri in a written statement, Friday, November 1.

Febri said, of the 518 HS codes for commodity groups whose imports were relaxed in the policy, nearly 88.42 percent or 458 commodities were code HS finished goods that could already be produced by the domestic industry.

However, said Febri, the enactment of Permendag Number 8 of 2024 has opened the door as wide as possible for imported products and has flooded the Indonesian market.

"So, we question the statement of the Minister of Trade that Permendag Number 8 of 2024 aims to protect the domestic industry, especially the textile industry. The facts that occur are the opposite. This Permendag does not require Pertek (Technical Regulations) or recommendations for importing finished goods into the Indonesian domestic market," he said.

"As a result, all TPT products, especially products, have opened the door to import as widely as possible by the policy," he continued.

Furthermore, Febri reiterated that the Ministry of Industry cannot act alone in maintaining a conducive climate for the domestic industry to continue to grow and become the backbone to achieve the 7-8 percent economic growth target set by President Prabowo Subianto.

According to Febri, other ministry/institutional policies greatly determine manufacturing performance. "We ask other ministries/agencies to reduce their respective sectoral egos in order to protect the domestic manufacturing industry," he said.

Meanwhile, Febri claims that his party has exerciseed all its main tasks and functions as industry coach in order to boost industrial growth, in order to achieve economic growth of 7-8 percent.

"Therefore, we hope that ministries/agencies that have policies related to the manufacturing sector can synergize by taking policies that have a positive impact on the growth of the industrial sector," he added.

In the S&P Global report, the decline in market demand is one of the causes of manufacturing contraction. This is common in both domestic and international markets, with geopolitical uncertainty that causes a decrease in export demand for eight consecutive months.

"Indonesia's manufacturing economy continued to decline in October, with new production, demand and labor down marginally since September. Panelists have often noted that market activity is less enthusiastic. In some cases, it is related to geopolitical uncertainty which causes clients to be alert and immobile," said S&P Global Market Intelligence Economist Paul Smith.

The sluggish business condition has prompted the company to reduce its staff staff in factories by three times in the past four months. Then, the buildup fell for five consecutive months, with the fastest decline since January 2021.