MINISTER of Finance (Menkeu) Sri Mulyani Indrawati revealed the decline in the performance of the Indonesian manufacturing industry last July due to declining market demand. This is suspected of unhealthy import trade practices.
Indonesia’s manufacturing Purchasing Manager’s Index (PMI) in July 2024 was 49.3, down from 50.7 in June 2024. This position indicates the first contraction since August 2021 or after 34 consecutive months of expansion.
“If this is an import attack that is unfair trade practice or unhealthy trade competition, then the government will take corrective steps,” said the Minister of Finance in the Press Conference on the Results of the 2024 KSSK III Periodic Meeting in Jakarta, Friday (2/8).
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The government, he continued, is trying to protect domestic industry to stem the onslaught of imported goods by imposing tariffs.
Anti-Dumping Import Duty (BMAD) and Safeguard Import Duty (BMTP) on seven commodities. Namely, textile products (TPT), ready-made clothing, ceramics, electronic devices, beauty products, ready-made textile goods, and footwear.
“We are coordinating with the Ministry of Trade and the Ministry of Industry to support the import attack,” he said.
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According to S&P Global Market Intelligence, the general market slowdown led to a marginal decline in operating conditions during July, with new orders declining and production falling for the first time in two years. Srimul said the reason for the decline in demand for new manufactured goods in Indonesia was due to moderation.
“The moderation can be domestic or export. If domestic, is it seasonal or is there competition for imported goods. We will investigate the demand side,” he said.
In addition, the condition of the manufacturing PMI is also reflected in the results of the July 2024 Industrial Confidence Index (IKI) survey which fell to 52.4 from the June 2024 IKI of 52.5. The slowdown in the IKI value last July was influenced by the decline in the value of the new order variable and the still contracted production variable. Srimul said the government continues to encourage industry players to increase competitiveness with fiscal instruments to improve the manufacturing PMI in the future.
“We use fiscal instruments to encourage the manufacturing sector to increase external resilience, such as for the basic metal industry. We formulate policies so that the PMI contraction period is not long,” he said. (n-2)
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