DEPUTY General Chair Coordinator for Maritime Affairs, Investment and Foreign Affairs of the Indonesian Chamber of Commerce (Kadin) Shinta Widjaja Kamdani is concerned that people’s purchasing power is increasingly being eroded.
According to him, Indonesia experienced consecutive deflation conditions for five consecutive months from May-September 2024. He said the deflation that occurred was caused by the volatility of food prices along with
This has a long-term impact on producers’ income and disrupts community economic activities. The Central Statistics Agency (BPS) noted that the Indonesian economy experienced deflation of 0.12% month-to-month (mtm) in September 2024.
Also read: The government is not worried about people’s purchasing power
There was a decline in the Consumer Price Index (CPI) from 106.06 in August 2024 to 105.93 last month.
“Regarding food price volatility is the main problem. What we are worried about is this problem affecting purchasing power (which is increasingly being eroded),” said Shinta at Menara Kadin, Jakarta, Wednesday (2/10/2024).
He is of the view that current national economic conditions indicate that domestic market consumption demand is slowing due to a tendency to weaken purchasing power.
Also read: Economist: Deflation Shows Opportunity for Weakening Purchasing Power
This problem is reflected in Indonesia’s manufacturing activity or Purchasing Manager’s Index (PMI), which contracted to 49.2 in September 2024.
Indonesia’s manufacturing PMI experienced a contraction for three consecutive months. In July 2024, the decline occurred quite deeply with manufacturing performance recorded below the expansion threshold of 50 to 49.3 and contraction continuing in August to 48.9.
“Clear demand “This influences the performance of our manufacturing PMI at this time,” explained Shinta.
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On the same occasion, General Chairperson of the Indonesian Chamber of Commerce (Kadin) Anindya Novyan Bakrie was of the view that the contraction in Indonesian manufacturing occurred because entrepreneurs were still wait and see. This was driven by uncertainty due to the transition period from the Joko Widodo government to the elected president Prabowo Subianto.
“In the last few months we have known that there is another government transition and also because of the political year, so there are many people wait and see,” he explained.
However, Anindya believes that the wait and see attitude of entrepreneurs will end after the inauguration of the 2024-2029 President and Vice President Prabowo Subianto and Gibran Rakabuming Raka.
Especially if there are policies made to support or promote ease of doing business in order to attract investment from within the country or abroad or foreign direct investment (FDI).
“However, in the future we are not worried about pro-business policies to increase FDI. Because this investment is one of the engines of the Indonesian economy, apart from domestic consumption and government spending,” he concluded. (Ins/P-3)
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