Manufacturing Index Slumps amid Influx of Imported Goods, Industry Minister Says
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3 September 2024 23:27 WIB
TEMPO.CO, Jakarta - Industry Minister Agus Gumiwang Kartasasmita said that Indonesia's manufacturing Purchasing Managers' Index (PMI) fell again in August. This was caused by a flood of cheap imported goods that have not yet been stemmed.
According to the minister, the flood of imported goods in the domestic market occurred because no policy from the ministry could stop the rate of imports.
Indonesia's manufacturing PMI this month was recorded at 48.9, down 0.4 points from July 2024 which was 49.3. According to the S&P Global release, the contraction in Indonesia's manufacturing PMI in August 2024 was influenced by the sharpest decline in output and new demand since August 2021. External demand also fell at the fastest pace since January 2023.
"Once again, we are not surprised by the deeper contraction in Indonesia's manufacturing industry. The drop in the manufacturing PMI value in August 2024 occurred because of the absence of significant policies from ministries or other institutions capable of improving the performance of the manufacturing industry," Agus Gumiwang said in a written statement Tempo received on Tuesday, September 3
The decline in sales, Agus Gumiwang said, was driven by the influx of cheap imported goods in large quantities into the domestic market, especially since May 2024. S&P Global also noted that these weakening sales resulted in an increase in finished goods inventories for two months.
"The arrival of low-priced imported goods will cause people to prefer them for economic reasons. This may cause domestic industries to further cut product sales and utilization of their production machinery," the Golkar Party politician said.
The manufacturing PMI is an economic index that reflects the health of a country's manufacturing and services sectors. This index consists of five main indicators that include elements of new orders, inventories, production, shipments, and labor.
In April 2024, the Manufacturing PMI reached 52.9, then dropped to 52.1 in May 2024, then to 50.7 in June 2024, and 49.3 in July 2024.
Daniel A Fajri
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