Government Claims Industrial Sector Grows Aggressively Supported By Tax And Export Incentives

Minister of Industry Agus Gumiwang Kartasasmita (Photo: kemenperin.go.id)

JAKARTA - The government through the Ministry of Industry (Kemenperin) said that the manufacturing sector had emerged from a contractionary condition and returned to positive growth and became a contributor to national economic growth throughout the second quarter of 2021.

Minister of Industry (Menperin) Agus Gumiwang said this sector is the highest source of growth with a book of 1.35 percent. In the same period, manufacturing business activities recorded growth of 6.91 percent despite being under pressure due to the COVID-19 pandemic.

"Although the Ministry of Industry as an industry coach is only supported by a minimal budget, the manufacturing sector is still able to make a maximum contribution," he said in a press statement as quoted on Saturday, August 7.

In his explanation, the Minister of Industry said that since the pandemic broke out early last year in Indonesia, a number of industrial sub-sectors have experienced a fairly high rebound. The sub-sectors include the transportation equipment industry at 45.70 percent, followed by the base metal industry at 18.03 percent, and the machinery and equipment industry at 16.35 percent.

Then, the rubber industry for rubber and plastic goods is 11.72 percent and the chemical, pharmaceutical and traditional medicine industries are 9.15 percent.

Furthermore, the manufacturing sector also contributed the largest to the national Gross Domestic Product (GDP) in the second quarter of 2021 with a contribution of 17.34 percent. The top five contributors to GDP in this period were the food and beverage industry at 6.66 percent, the chemical, pharmaceutical and traditional medicine industries at 1.96 percent.

Then, the metal goods industry, computers, electronic goods, optics and electrical equipment by 1.57 percent, the transportation equipment industry 1.46 percent, and the textile and apparel industry by 1.05 percent.

"This shows that the manufacturing industry has an important role for national economic growth," he said.

In terms of exports, during the first semester, the value of foreign trade was recorded at 81.06 billion dollars. This figure dominates 78.80 percent of the total national exports which reached 102.87 billion US dollars.

One of the factors driving the growth of the manufacturing sector is the policy of extending the Value Added Tax Borne by the Government (PPN-DTP) for the automotive and housing sectors.

In his records, in the second quarter of 2020 the volume of car sales was only 24,040 units, then increased to 187,030 units in the first quarter of 2021, until it continued to shoot up to 206,440 units or up 758 percent in the second quarter of 2021 thanks to the VAT-DTP policy.

Meanwhile, incentives for the property sector will encourage an increase in sales of 15-20 percent, which will impact on supporting manufacturing industry products, especially cement, ceramics and building materials, which reach 8.05 percent.