The Indonesian Chamber of Commerce and Industry (Kadin) encourages support and incentives from the government to boost the national manufacturing industry. This is needed after the decline in Indonesia's manufacturing Purchasing Manager Index (PMI) to 48.9 in August 2024, according to the S&P Global report, Monday (2/9/2024),

‘Domestically, we see that the financing factor for the export-oriented manufacturing industry by the government is still influenced by the high level of BI interest rates, causing credit to be expensive,’ said Vice Chairman of Kadin Indonesia Coordinator for Organisation, Law and Communication, Yukki Nugrahawan Hanafi.

Yukki also said that the challenge of Indonesia's labour productivity, which is not yet competitive when compared to other countries in Southeast Asia, is still one of the obstacles holding back the processing industry. Therefore, Kadin encourages government fiscal incentives to boost the national manufacturing industry.

‘Ease of doing business as well as supply chains and increasing labour productivity are prerequisites for encouraging the manufacturing industry to become a pillar of the national economy again,’ he said.

Vice Chairman of Kadin Indonesia for Agrarian, Spatial and Regional Affairs Sanny Iskandar said that the government is expected to be able to maintain policy synergies between ministries and institutions to support the performance of the manufacturing industry. This is considered important so that the domestic manufacturing industry does not experience a decline.

‘The government is expected to maintain policy synergies between ministries / agencies to support the performance of the manufacturing industry and not instead issue policies that further weaken the industrial world,’ said Sanny.

He said the decline in the manufacturing Purchasing Manager's Index (PMI) in August 2024 showed a contractionary trend in recent months, while signalling that the manufacturing industry was experiencing a difficult situation.

This situation does not only come from global conditions, but also from within the country. The complex supply chain situation also adds to the challenges for the manufacturing industry in the country.

Therefore, Sanny encouraged the government to be careful and precise in issuing policies.

‘Industry players believe that if the government issues pro-industry policies, it can immediately return Indonesia's manufacturing PMI to an expansion position,’ he concluded.