Indonesia's Manufacturing PMI in October 2024 Remains in Contraction Zone: Ministry of Industry Calls for Urgent Policy Support

Jakarta, INTI - The Purchasing Manager's Index (PMI) for Indonesia's manufacturing sector in October 2024 remained at 49.2, the same level as the previous month, signaling continued contraction in the sector. According to S&P Global, the manufacturing PMI for this period reflects a slight decline in output and new orders, extending the downward trend for four consecutive months.

Responding to this persistent contraction, the Ministry of Industry’s spokesperson, Febri Hendri Antoni Arif, stated that without a substantial policy shift to bolster the manufacturing sector and protect the domestic market, such as revising Trade Ministerial Regulation No. 8/2024, it is unlikely for Indonesia's manufacturing PMI to rebound.

"The October 2024 PMI published by S&P Global clearly shows the impact of the Trade Ministerial Regulation No. 8/2024," Febri commented in Jakarta on Friday, November 1.

The implementation of Regulation No. 8/2024 has contributed to a decline in manufacturing performance as Indonesia's domestic market is flooded with imported finished products. This regulation removed the requirement for the Ministry of Industry to issue Technical Approvals (Pertek) for imported ready-made clothing.

Out of the 518 Harmonized System (HS) codes covered under the relaxed import policy, nearly 88.42% or 458 commodities consist of finished goods that local industries in Indonesia are already capable of producing. This policy has opened the door wide for the import of finished products, saturating the Indonesian market.

"We challenge the Trade Minister's statement that Regulation No. 8/2024 is intended to protect domestic industries, particularly the textile sector. In fact, the opposite is happening. The regulation does not require any technical approval or recommendation to import finished goods into the Indonesian market. Consequently, textile and apparel products, especially finished goods, are now entering the market freely under this policy," Febri emphasized.

Febri reiterated that the Ministry of Industry cannot single-handedly create a conducive environment for domestic industries to grow and support President Prabowo Subianto's economic growth target of 7-8%. Policies from other ministries and government agencies are crucial to improving the manufacturing sector's performance.

"We urge other ministries and agencies to set aside sectoral interests to protect the domestic manufacturing industry. The Ministry of Industry has taken every necessary step within its mandate to support industry growth and achieve the economic growth target of 7-8%. We hope that relevant ministries and agencies will adopt policies that positively impact the growth of the manufacturing sector," said Febri.

One of the most pressing policies needed by the Ministry of Industry and the industrial sector is the imposition of Safeguard Measures (BMTP) on ready-made clothing. Previously, the Ministry of Industry had proposed BMTP on clothing items, discussed recently in Bandung.

"However, the proposal continues to face resistance from related ministries and agencies. The industrial sector urgently needs protection for downstream products and finished goods. Immediate action is essential for the manufacturing industry to survive," Febri concluded.