Indonesia's Business Confidence Index Reaches Its Highest Level

INTI,- Business and industrial actors in Indonesia feel optimistic about their business conditions. According to the spokesperson for the Ministry of Industry (Kemenperin), Febri Hendri Antoni Arif, during the release of the April 2023 Industrial Confidence Index (IKI) in Jakarta, Friday (28/4). According to him, the survey results showed that 64.7% of business owners were optimistic about their business prospects in the next six months, up from 63.5% in the previous month. Meanwhile, 9.9% of respondents are still pessimistic about the future of their business, the lowest figure since IKI was launched.

The majority of those who expressed optimism cited their confidence in the improving market conditions and the government's better policies. In terms of subsectors, the rubber, plastic and furniture industries showed improvement and shifted from contraction to expansion in April. The rubber and plastic subsector saw an increase in new orders, unlike the previous month, where distributors reduced orders to clear their existing stocks. The furniture industry also experienced an increase in orders, production and a decrease in inventory due to preparations for Hari Raya and increased foreign orders.

On the other hand, the metal, non-machinery, and equipment subsector experienced contraction after previously expanding. All of its components showed a significant contraction, mainly due to a decrease in domestic orders. The Ministry of Industry will take steps to increase domestic orders.

The textile, clothing, leather, footwear, wood, and non-metallic mineral products industries are still contracting. The issue of import domination continues to dominate amid weak domestic product competitiveness. In particular, the textile industry is being killed by high fabric imports, which are killing the upstream industries such as the yarn and fiber industry. Stronger supervision and control of imports are necessary. Currently, the Ministry of Industry is still implementing a machine restructuring program, and it is hoped that the HGBT program can be implemented more widely. Last month, the textile, clothing, leather, footwear, and accessory industries experienced an increase in exports. An export task force has been established to maintain the stability of foreign sales growth.

The "other manufacturing industries" sector consists of the gemstone, precious metal, jewelry, musical instrument, sports equipment, children's toy, medical equipment, eyewear, stationery, and other industries, some of which have high export potential. However, since November, this sector has always recorded contraction, contributed by the contraction of new orders and production. The contraction in new orders was due to a decrease in orders from abroad, while the contraction in production was due to a decrease in orders. The demand downturn resulted from the global recession, and one of the affected industries was the false eyelash industry, which experienced a decline in demand. Additionally, raw material constraints continue to persist because domestic suppliers have not yet met the required standards. The decrease in demand for stationery was influenced by the fact that the new school year has not yet begun. As for the children's toy industry, it is highly dependent on plastic raw materials and therefore highly dependent on global oil prices. Furthermore, domestic consumers currently prefer primary consumption, such as food, over tertiary products. The Ministry of Industry has undertaken several measures, such as seeking new markets by collaborating with existing ITPC and Atdag and improving digital literacy among domestic manufacturers. The government also plans to promote the domestic market through the TKDN-IK policy, which is crucial for small industries to participate in the supply of goods and services and enter the e-catalog. Additionally, SNI certification facilitation is provided for small industries.***.Hans