economy

If Coordination Goes Smoothly, The Minister Of Industry Is Optimistic That The Industry Will Bounce Back

The processing industry consistently plays a major role in the national economy, showing a significant contribution of 18.52 percent in the second quarter of 2024. This figure is an increase from the same period last year, which was around 18.26 percent. Thanks to this contribution, the processing industry has become the largest source of economic growth in the second quarter, accounting for 0.79 percent. "In the second quarter of 2024, the growth of the non-oil and gas processing industry reached 4.63 percent year-on-year, slightly down from the 4.64 percent growth in the first quarter of 2024," said Minister of Industry Agus Gumiwang Kartasasmita in a statement on Monday (August 12). The growth in the non-oil and gas processing sector is driven by both domestic and international demand. For instance, the food and beverage industry grew by 5.53 percent, boosted by increased domestic demand during the Idulfitri and Iduladha celebrations, as well as the rice harvest season. Additionally, the basic metal industry saw a growth of 18.07 percent due to rising foreign demand for iron and steel products, along with national steel consumption. The chemical, pharmaceutical, and traditional medicine industries also grew by 8.01 percent, reflecting increased demand both domestically and internationally. "Despite the strong performance in these sectors, the textile and garment industry actually contracted by 0.03 percent year-on-year. This decline is attributed to a drop in textile production due to a surge in imported textile products flooding the domestic market," Agus explained. Furthermore, the leather, leather goods, and footwear industries also experienced slower growth at 1.93 percent year-on-year, caused by a decrease in footwear production following the closure of several factories due to reduced domestic and international demand, particularly in Banten, West Java, and Yogyakarta.

The Minister of Industry pointed out that the manufacturing sector has always been a backbone and a key growth driver for the national economy. The industry's performance is also tied to the government's efforts in creating a favorable business climate. "In addition to the unstable global economic conditions, domestic industrial activities are affected by regulations that don't favor industry players. Therefore, serious and targeted coordination is essential," he explained. The slowdown in the industrial sector is evident in Indonesia's Manufacturing Purchasing Manager’s Index (PMI) for July 2024, which dropped to 49.3, indicating a contraction phase after 34 consecutive months of expansion. "President Joko Widodo mentioned in this morning's Cabinet Meeting that the contraction in the manufacturing PMI needs to be monitored, as several Asian countries are experiencing similar issues, with the biggest decline coming from output," said the Minister. During the Cabinet Meeting held in the new capital, President highlighted that high import costs for raw materials due to currency fluctuations and the influx of imported products could weaken domestic demand. "He emphasized the importance of using local raw materials and protecting domestic industries, as well as exploring non-traditional markets and new export opportunities for Indonesian products," Agus noted. Additionally, a similar trend was observed in the Industrial Confidence Index (IKI) for July 2024, which fell to 52.4 from 52.5 in June. The decline in the IKI value last July was influenced by a drop in new orders and ongoing production contraction. "This reflects a decrease in confidence and optimism among industry players, partly due to the lack of clear legal certainty," he added.

Tag: Agus Gumiwang Kartasasmita Global Economic Minister Of Industry Yogyakarta