Indonesia's manufacturing Purchasing Managers' Index (PMI) in October 2024 stood at the same level as the previous month, 49.2, meaning it remains in contraction. S&P Global said the 2024 manufacturing PMI was affected by a slight decline in output and new orders, extending the period of decline that has lasted four months.
Responding to the October 2024 PMI, Ministry of Industry spokesperson Febri Hendri Antoni Arief said that as long as there are no significant policies to support manufacturing and protect the domestic market, such as revising Minister of Trade Regulation No. 8/2024, the Ministry of Industry is not surprised that Indonesia's manufacturing PMI keeps contracting.
“Indonesia's October 2024 PMI from S&P Global is concrete proof of the impact of Permendag 8/2024,” Febri said in Jakarta on Friday (1/11).
The enactment of Permendag No. 8/2024 is one of the causes of declining manufacturing performance, because Indonesia's domestic market has been flooded with imported finished products. Permendag No. 8/2024 removed the requirement for a Technical Approval (Pertek) from the Ministry of Industry for apparel products.
Of the 518 HS codes of commodity groups whose imports were relaxed under the policy, the vast majority, 88.42 percent or 458 commodities, are HS codes for finished goods that domestic industry can already produce. Permendag No. 8/2024 has opened the door wide to imported finished products, which have flooded the Indonesian market.
“So we question the Minister of Trade's statement that Permendag No. 8/2024 aims to protect domestic industry, especially the textile industry. The facts show the opposite. Permendag No. 8/2024 does not require a Pertek or recommendation to import finished goods into Indonesia's domestic market. As a result, the policy has opened the import door wide to all TPT products, especially finished products,” Febri said.
He reiterated that Kemenperin cannot act alone in maintaining a conducive climate for domestic industry to keep growing and become the backbone for achieving the 7–8 percent economic growth target set by President Prabowo Subianto. Policies of other Ministries/Agencies largely determine manufacturing performance.
“We ask other Ministries/Agencies to set aside their sectoral egos in order to protect domestic manufacturing. Kemenperin has exercised all our main duties and functions as Industry Supervisor to boost industrial growth and achieve 7–8 percent economic growth. We therefore hope Ministries/Agencies with policies related to manufacturing can work together by adopting policies that have a positive impact on industrial growth,” Febri said.
One policy from other Ministries/Agencies that Kemenperin and industry urgently need now is the imposition of Safeguard Import Duties (BMTP) on apparel. Kemenperin previously proposed BMTP for apparel, which was discussed in Bandung some time ago.
“However, the relevant Ministries/Agencies still reject the proposal. Industry truly needs protection in the finished or downstream product market. So real action is needed immediately so manufacturing can survive,” Febri concluded.
Source: Press Release of the Ministry of Industry of the Republic of Indonesia