Manufacturing Industry Remains Resilient in the Face of the Pandemic

JAKARTA – The performance of Indonesia's manufacturing industry has shown great strides and growth, on the back of its increasing contribution to the Gross Domestic Product (GDP). In the second quarter of 2021, the non-energy processing and manufacturing industries managed to grow by 6.91% and contribute up to 17.34% to the GDP, higher than any other economic sector.

"The resilience of the manufacturing industry has been tested by two crises: the 1998 Asian Economic Crisis and the 2020 Covid-19 Pandemic. In both cases, the manufacturing industry was able to recover itself despite the great pressures it faced," Industry Minister Agus Gumiwang Kartasasmita said in a statement on Wednesday (15/9).

Minister Agus noted that, aside from the increasing contributions to the GDP and its overall growth, the amount of investment in the manufacturing sector has also increased. In addition, the industry's exports have always been a dominant contributor to the national export structure and has shown an incredible resilience to environmental crises as well.

"The performance of our manufacturing industry dispels any notion or idea that Indonesia is experiencing de-industrialization," he underlined.

The industry's performance is indicated by the Purchasing Manager's Index (PMI) of Indonesia's manufacturing sector in the past eight months, since November 2020, which sits at level 50, meaning it is "in the phase of expansion". In June 2021, the figure rose to 53.5. The sector briefly experienced a contraction phase afterwards, decreasing the figure to 40.1 due to the heavy public and industrial activity restrictions (PPKM) implemented by the government, before rising again to 43.7 by August 2021.

Its resilience was also reflected in its significantly high export values, of which between January and July 2021 reached US$94.62 billion, thereby contributing 78.74% towards the overall national export amount. When compared (C to C) to the period of January to July 2020, the industry grew by 31.36%, higher than its performance throughout the whole of 2020.

Since the Covid-19 pandemic, the Industry Ministry (Kemenperin) has continued to refine its policies for implementing health protocols for the sake of smooth operation and mobility of industrial activities during PPKM periods, as a way to quell the further spread of Covid-19.

"These policies aim to help sustain and make sure industrial activity runs smoothly, which include measures relating to occupational health and safety, company management and production sustainability. With these regulations in place, the industrial sector is expected to become a driving force in the effort to recover the national economy," the Minister added.

In order to achieve its targets, the Kemenperin issued a ministerial circular letter (SE Menperin) on the implementation of Operational Permits and Mobility of Industrial Activities (IOMKI). "The last thing we published in relation to this aim was the Kemenperin Decree no.5/2021 which made amendments to SE Menperin no. 3/2021 on Operations and Mobility during the Covid-19 emergency," the Minister said.

The amendments put forth by SE Menperin no. 5/2021 include, among others, edits to the operational explanations and the mobility of industrial activities. This includes all activities of industrial companies and industrial estate companies along the value chain, starting from the procurement of raw materials and auxiliary materials from suppliers, production and support operations to product distribution and the mobility and activities of staff, employees and other workers.

"Also, the recent SE Menperin also outlines rules and procedures regarding the use of the PeduliLindungi app to ensure that workers can be tracked and monitored effectively. We also ran vaccination drives for industry workers operating in the Java-Bali area, targeting 5 million people, or 10 million doses administered, since the drive began in July 2021," Minister Agus explained.