Minister Airlangga: The Performance of the Manufacturing Industry of Indonesia is increasingly stunning

INDUSTRY.co.id - Jakarta, The rise of Indonesia's purchasing managers index (PMI) from 48.6 in July to 50.7 in August 2017 released by Nikkei and Markit, further demonstrates the positive performance of Indonesia's manufacturing industry.

Based on the Nikkei, a PMI above 50 denotes expansionary manufacturing, while below 50 indicates contraction manufacturing.

The Minister of Industry, Airlangga Hartarto, said that the rise in the manufacturing index is driven not only by strengthening demand but also because of the flow of investment realization and increased utilization in the industrial sector.

"Good moment like this should be kept together and should be improved," said Airlangga in Jakarta, Wednesday (6/9/2017).

Therefore, the Minister of Industry argues that there is a need for strong sectoral coordination to spur the growth rate of the national manufacturing industry. The determinants of such expansion, among others, availability of raw materials and affordable energy prices.

"So the government to harmonize the regulation so that all domestic industry actors get the ease of trying," he said.

Moreover, according to Airlangga, Indonesia's manufacturing value added rating is also being lifted among G20 countries. Based on data from the United Nations Industrial Development Organization (UNIDO) in the assessment of manufacturing value added, also recorded Indonesia made it into the top 10 of the world, past the achievements of Mexico and Spain, even above the UK and Russia.

"This year, Indonesia is projected to occupy the 9th position in the world, therefore it is necessary to synergize with the stakeholders to realize the performance of the national industry in order to grow and increase in the next period, especially the manufacturing industry which is seen as the base is added value," he explained.

In this regard, priority policies underway by the Ministry of Industry, including the development of natural resource-based industries through downstream, enhance the competitiveness and productivity of export-oriented labor-intensive industries, and spur the competence of industrial human resources.

Meanwhile, IHS Economist Markit Pollyanna De Lima said business conditions in Indonesia are getting better in the third quarter, as domestic demand and exports increase.

"The rise in performance in August has made business confidence in the upcoming outlook," he said.

According to him, the increase in export demand in August is one of the fastest period of increase that occurred in the last 6.5 years. Manufacturers execute large quantities of raw materials in bulk over the previous few months.

On the other hand, Nikkei calculates PMI based on a monthly survey to more than 300 large companies. Respondents came from eight business sectors, namely metal, plastic and chemical industries, electricity, food and beverages, machinery, textiles and clothing, paper, rubber and transportation.

Earlier, the Central Bureau of Statistics (BPS) reported Indonesia's trade balance in July 2017 deficit of approximately USD271.2 million. Indonesia's export value in the seventh month was recorded at USD13.62 billion. This figure is lower than the realization of imports reached USD13, 89 billion.

"The cause of the deficit in July was due to a significant increase in raw material and auxiliary materials or capital goods after Lebaran by 39 percent (July compared to June 2017). But this import is expected to drive the industry to boost economic growth," explained BPS Head Suhariyanto, some time ago.