RI’s Manufacturing Sector Strengthens, Here’s the Comparison with Other Countries

RI’s Manufacturing Sector Strengthens, Here’s the Comparison with Other Countries

Indonesia recorded an expansive Purchasing Managers’ Index or PMI Manufacturing in the last 11 months, until it recorded a strengthening last month. Conditions are quite good compared to a number of countries in Asia. Head of the Fiscal Policy Agency (BKF) of the Ministry of Finance Febrio Nathan Kacaribu explained that the manufacturing sector has continued to be in the expansion zone since September 2021.

This shows a positive trend in manufacturing performance in the midst of the Covid-19 pandemic. “In July 2022, the Manufacturing PMI was recorded at 51.3, up from the position in June 2022 at 50.2. This strengthening trend shows a recovery that is in line with the trend of a number of countries,” he said in an official statement, Tuesday (2/8/2022).

He mentioned that the trend of strengthening the manufacturing sector also occurred in Malaysia (PMI Manufacturing 50.6) and Thailand (52.4). There are also countries that are still experiencing a slowdown even though they are still in the expansion zone, such as Japan (52.1), Vietnam (51.2), and the Philippines (50.8). On the other hand, according to Febrio, countries such as South Korea (49.8) and Taiwan (44.6) are still in the contraction zone. The continued domestic recovery has been a major factor in Indonesia’s positive manufacturing performance.

He considered this to be in line with the better control of the Covid-19 pandemic,” he said.
According to him, the pace of expansion is in line with a survey by Bank Indonesia regarding the trend of manufacturing production capacity which has consistently increased in the last two quarters. In fact, his condition is starting to approach pre-pandemic levels. “This increase in production occurred in line with strong domestic consumer demand. Demand from the consumption side will continue to be maintained so that this strong manufacturing performance can continue to support the recovery going forward,” he said. Febrio views that price pressures, especially non-energy world that are starting to gradually subside, can be a positive factor for the development of the manufacturing sector going forward.

Minister of Finance Sri Mulyani Indrawati also said that the manufacturing sector had indeed recovered, as reflected in the high value added tax (VAT) payments, reflecting that its activities were already running optimally. “Manufacturing trade has soared since last year. We always convey VAT originating from double-digit trade manufacturing, even last year, this year it even increased by more than 50 percent,” Sri Mulyani said at the KSSK press conference, Monday (2/8/2022).

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