Indonesian Manufacturing PMI Still Contracting, Ministry Of Industry: Need Rules To Protect Domestic Industry

Illustration. (Photo: Doc. Antara)

JAKARTA - Indonesia's manufacturing Purchasing Manager's Index (PMI) in November 2024 was recorded at 49.6, or still in the contraction zone for five consecutive months. The government is asked to strengthen domestic market security instruments to protect domestic industries.

Based on the release of S&P Global, the PMI Indonesia score rose 0.4 compared to the previous month. Although still in a contraction condition, this increase is better than Malaysia and Vietnam, which experienced a decline of 0.3 and 0.4 points, respectively. This increase reflects the resilience of the Indonesian manufacturing industry.

Spokesperson for the Ministry of Industry, Febri Hendri Antoni Arif, admitted that his party was not surprised that the Indonesian manufacturing PMI index tends to stagnate below 50, while other ASEAN countries mostly have indexes above 50.

According to Febri, the PMI survey from S&P Global was conducted on companies that are already operating in Indonesia, not potential investors.

"There are still many regulations that do not support domestic industries, even though these regulations are needed by manufacturing. In fact, the current regulations make it difficult for industrial movement space to increase production utilization," said Febri in a written statement, quoted on Tuesday, December 3.

In addition, products are imported, both legal and illegal, is still the cause of the contraction of Indonesia's manufacturing PMI in November 2024. The domestic market is flooded with imported products, thus reducing demand for domestic products.

The import relaxation policy is also considered to open the door for imported products and has flooded the Indonesian market.

Febri explained that the comparison of trade measures instruments between Indonesia and other countries shows that Indonesia's domestic market is not protected.

Adapun trade measures adalah kebijakan yang diterlakukan oleh negara-negara anggota WTO untuk menghambat masuknya produk impor ke pasar domestik mereka.

It is known, Indonesia has 207 types of instruments to inhibit the rate of imports. In comparison, the RRT has 1,569 and the United States has 4,597 instruments. Even in ASEAN, the number of Indonesian instruments is less than Thailand (661), the Philippines (562) and Singapore (216).

Febri assessed that the Ministry of Industry continues to support the implementation of security instruments to protect domestic industries that suffer losses due to the surge in imports, according to WTO regulations.

This step includes the application of Safeguard Measure Import Duty (BMTP) and Anti-Dumping Import Duty (BMAD).

He stated that demand and increased sales must be guarded and guarded, so that in a weak market condition, the domestic industry can certainly host it in its own country.

"Reduce the entry of cheap legal goods and continue to fight the entry of illegal goods," said Febri.