Manufacturing Sector Drives Indonesia's Export Growth in 2023

INTI,- Manufacturing sector contributes significantly to Indonesia's export performance in January-April 2023, according to the latest release from the Central Statistics Agency (BPS). Manufacturing exports accounted for 70.21% or USD 60.63 billion of the total exports during this period, which amounted to USD 86.35 billion.

The monthly export growth reached its lowest point in April 2023, reflecting a seasonal pattern due to the Idul Fitri holiday. The year-on-year export value in April 2023 also contracted due to the decline in commodity prices. However, the Ministry of Industry's spokesperson, Febri Hendri Antoni Arif, expressed confidence that the industrial sector's export performance would rebound after the pandemic.

This confidence is supported by positive indicators of industrial sector performance and expansion. Both the Manufacturing Purchasing Managers' Index (PMI) released by S&P Global and the Industrial Confidence Index (IKI) launched by the Ministry of Industry indicate expansion levels, despite the ongoing global economic challenges.

In April 2023, the non-oil and gas processing industry accounted for 67.32% of the total national exports. The main export markets for non-oil and gas processing industries included China (22.90%), the United States (11.91%), and Japan (5.85%). BPS attributed the monthly decline in non-oil and gas processing exports to a drop in the export value of jewelry, precious goods, and palm oil.

Total imports also declined in April 2023, falling from USD 20.59 billion in March 2023 to USD 15.35 billion, representing a 25.45% decrease. The import value of raw materials and auxiliary materials dropped by 23.26% on a monthly basis. Imports decreased for all types of goods, including raw materials, capital goods, and consumer goods, influenced by seasonal patterns that affected the demand for raw materials and capital goods for production activities.

The decline in imports of raw materials can also be attributed to global market conditions. This aligns with the decrease in export values, especially in export-oriented subsectors such as the textile and textile product (TPT) industry, leather and footwear industry, and furniture industry.

In the plastic industry, the decline in raw material imports occurred in April due to an increase in synthetic resin imports in the previous month. The increase in imports in March indicated a rise in production levels in the plastic goods industry as a user of synthetic resin, coinciding with preparations for the Idul Fitri 1444 H holiday. Manufacturers maximized plastic goods production to meet the demand, including for the food and beverage industry.

Facing declining raw material imports, the Ministry of Industry will continue to strive for increased exports and domestic market dominance. Based on the April 2023 IKI data, 73.9% of industrial businesses reported improved or stable business conditions, indicating an increasing trend of optimism among industry players.

The Ministry of Industry is implementing strategic measures to maintain market share for manufactured products in Indonesia. These measures include downstreaming policies to increase the value-added of commodities domestically and strengthen the national industrial structure. Downstreaming efforts also create new job opportunities in Indonesia.

To dominate the domestic market, affordable domestic products with comparable quality to imported goods are necessary. The Ministry of Industry pursues domestic market dominance through programs such as the Increased Use of Domestic Products (P3DN), acceleration of Domestic Component Levels (TKDN), and simplification of TKDN certification regulations for small industries.

Additionally, the government actively seeks to expand exports through bilateral and multilateral cooperation while opening export markets to non-traditional countries. Indonesia's participation as an official partner country in the April-held Hannover Messe 2023 exemplifies bilateral cooperation with Germany. International cooperation is expected to attract more investment in Indonesia's industrial sector. Collaborations with partner countries and global investors can integrate Indonesia into the global supply chain, enhance industrial competitiveness, and open up broader foreign markets, concluded the Ministry of Industry spokesperson.

These efforts to boost the manufacturing sector and promote exports are crucial for Indonesia's economic growth and recovery. By leveraging the positive indicators of industrial performance, implementing strategic measures, and expanding international cooperation, the government aims to revitalize the manufacturing sector, increase export volumes, and secure a stronger position in the global market.

As the country gradually emerges from the pandemic and navigates the challenges of the global economy, Indonesia's manufacturing sector is poised to regain its momentum and contribute significantly to the nation's economic development. ***. Hans