JAKARTA - The Ministry of Industry (Kemenperin) stated that the contraction of the Purchasing Managers' Index (PMI) of Indonesian Manufacturing in June 2021, especially due to the weakening of domestic and export demand and increasing production costs.
Even so, the government is optimistic that the manufacturing sector can re-enter the expansion phase through the strengthening of various strategic policies.
Based on the S&P Global report, Indonesia's Manufacturing PMI in June 2026 was recorded as falling into the red zone to 46.9, from 50.0 in May 2026. The decline reflects the performance of manufacturing which has contracted again after previously being in the expansion zone.
Spokesperson for the Ministry of Industry (Kemenperin) Febri Hendri Antoni Arief said that the weakening of new demand from both the domestic and export markets had an impact on the decline in production activities, the purchase of raw materials and the absorption of labor.
At the same time, industry players are also facing increased production costs due to rising raw material prices and exchange rate weakness. This condition has caused the inflation of input prices to be the second highest since the S&P Global PMI survey began in 2011.
"This condition needs to be seen as a challenge that must be answered through strengthening policies to increase the competitiveness of national industries," said Febri as quoted from a written statement, Thursday, July 2.
According to Febri, overall pressure on PMI this month is more influenced by weakening demand and increasing production costs.
Therefore, the government is trying to ensure that various strategic policies run effectively so that the burden on industry is reduced and manufacturing activity increases again.
One of the policies that is considered capable of increasing industrial efficiency is the implementation of the Certain Coal Gas Price (HGBT) program. The program is an important instrument to reduce energy costs for the industrial sector that uses coal gas as raw materials and the main energy source.
"This policy has been felt by industry players and has proven to be able to increase production efficiency and maintain the competitiveness of Indonesian manufacturing products. Therefore, the implementation of HGBT needs to continue to be strengthened so that the benefits are optimally absorbed by all recipient industries," he said.
As part of these efforts, on Monday, June 29, the government decided to lower the price of gas from liquefied natural gas (LNG) regasification for the industrial sector to 13 US dollars per MMBTU from the previous 20-23 US dollars per MMBTU. The policy is aimed at maintaining the competitiveness of the national industry while preventing layoffs.
"The decrease in the price of industrial gas resulting from the regasification of LNG is a breath of fresh air for the industry and is one of the solutions to bring the Manufacturing PMI back on the expansion track in the next few months," said Febri.
In addition to energy efficiency, the Ministry of Industry also assessed that protection of domestic industries is becoming increasingly important in the midst of increasingly tight global competition.
According to Febri, this policy not only maintains business continuity, but also protects the absorption of labor and reduces the risk of layoffs.
"In the midst of a situation where competing countries are still moving expansively, the government will not stand still. Through the involvement and collaboration of cross-ministry/government institutions, the government will continue to strive to create a conducive business climate," he explained.
Febri added that the government continues to encourage the improvement of industry competitiveness through various strategic programs, including increasing the use of domestic products (P3DN), facilitating manufacturing investment, securing the domestic market from unhealthy trade practices, and expanding export access to non-traditional markets.
These steps are expected to be able to maintain industrial utilization while strengthening the competitiveness of national manufacturing.
In the midst of declining manufacturing performance in June 2026, the Ministry of Industry noted that there were still positive signals from the results of the S&P Global survey. The level of optimism of industry players towards business prospects in the next 12 months increased compared to the previous month, driven by expectations of easing price pressures and improving market demand.
The English, Chinese, Japanese, Arabic, and French versions are automatically generated by the AI. So there may still be inaccuracies in translating, please always see Indonesian as our main language. (system supported by DigitalSiber.id)
