Ministry of Industry Emphasises PMI Weakening Due to Global Supply Disruptions
The weakening of the PMI figure is the impact of global dynamics, particularly geopolitical conflicts that trigger supply disruptions and surges in commodity prices as well as logistics costs.
Jakarta (ANTARA) - The Ministry of Industry (Kemenperin) has affirmed that the weakening of Indonesia’s manufacturing Purchasing Managers’ Index (PMI) in April 2024 was triggered by global supply disruptions stemming from geopolitical dynamics.
In April this year, the manufacturing PMI released by S&P Global experienced a slowdown to 49.1 from 50.1 in March 2024.
“The weakening of the PMI figure is the impact of global dynamics, particularly geopolitical conflicts that trigger supply disruptions and surges in commodity prices as well as logistics costs. This certainly has a direct impact on national industrial production activities,” said Kemenperin Spokesperson Febri Hendri Antoni Arif in his statement in Jakarta on Monday.
He explained that global uncertainty has disrupted the industrial raw material supply chain, while also driving up prices that add to production cost burdens. This situation ultimately impacts the decline in domestic manufacturing performance.
In response to the situation, Kemenperin continues to carry out mitigation steps and strengthening of the national industrial sector. Efforts undertaken include matching the supply chain industrial ecosystem affected, such as the plastics industry, to maintain the sustainability of raw material supplies.
In addition, Kemenperin is also promoting the use of the Local Currency Transaction (LCT) scheme to reduce dependence on foreign currencies and minimise exchange rate fluctuation risks.
Furthermore, Kemenperin is accelerating the formulation of various strategic policies, including strengthening import substitution, increasing the use of domestic products (P3DN), and diversifying sources of raw materials and export markets.
These efforts are also accompanied by facilitation for industry players through mentoring programmes, enhancement of small and medium industry capacity (IKM), and acceleration of digital transformation to improve efficiency and national industrial competitiveness.
“In the end, all these efforts are aimed at the resilience and independence of the national industry as well as maintaining production utilisation, so that it can achieve the government’s primary priority goal of protecting industrial workers from workforce reductions or layoffs,” he stated.
In addition to industrial protection policies implemented before the geopolitical turmoil in the Middle East, Kemenperin is currently preparing new proposals in the form of incentives and additional protection policies for the industry.
“The Minister of Industry is preparing proposals for new incentives and domestic industrial protection policies in facing the impact of geopolitical turmoil. This draft of new incentives and policies strengthens previous industrial protection policies. With this, it is hoped that it can strengthen the industrial supply chain in facing global pressures and protect its workers well,” said Febri.
Based on S&P Global data, pressure on the manufacturing sector is not only experienced by Indonesia but also other Southeast Asian countries, although to varying degrees. Vietnam, for example, still records a PMI around 50.5, while Malaysia is at 51.6. Meanwhile, the Philippines is experiencing a deeper contraction with a PMI of 48.3.
With a PMI achievement of 49.1, Indonesia is in the moderate contraction group and aligns with the weakening trend in some ASEAN countries. Nevertheless, Indonesia’s manufacturing performance is considered relatively better because it is supported by domestic demand.
“Indonesia’s position in moderate contraction shows that the national manufacturing sector is relatively resilient amid global pressures. However, this is also an important signal to strengthen the domestic industrial structure to be more resistant to external turmoil,” explained the Kemenperin Spokesperson.
Meanwhile, the Industrial Confidence Index (IKI) survey shows that industry players still have optimism towards production prospects in the next six months. The optimism level is recorded at 70.1 per cent, although it experienced a slight decline of 1.7 per cent compared to the previous month.