Election to Drive Indonesia’s Manufacturing Sectors

(Photo: Pixabay)

JAKARTA (TheInsiderStories)—Industry Minister Airlangga Hartarto on Tuesday (19/08) expressed confidence that the election will drive manufacturing activities that eventually boost economic growth in the third quarter of 2018.

The manufacturing sectors that will be positively affected by-elections are the food and beverages, textile, footwear, and printing industry. “Such performance surge will raise economic growth in the third quarter of 2018 or higher than the previous period,” he said in a press release.

Indonesia will conduct presidential and local elections in 2018 and 2019. It includes 17 provinces and 154 cities with total voters of 152 million people. It is larger compared to the local leader’s election in 2015 and 2017.

According to Indonesia Statistics Bureau data, there is an improvement in the large and medium manufacturing industries in the first quarter of 2018. The two sub-sectors grew by 5.01 per cent in the first quarter of 2018 in year on year (YoY) basis.

It was an achievement as the industry suffered a slowdown in the last quarter of 2017 with a contraction of 0.61 per cent (quarter to quarter). Moreover, the annual growth of large and medium manufacturing production in the first three months of this year able to surpass growth in the quarter I / 2016 of 4.13 percent (YoY) and the quarter I / 2017 of 4.46 percent (YoY).

The leather, leather goods, and footwear industry grew 18.87 per cent, the highest growth in the first quarter of 2018 (YoY). It was followed by the growth in machinery industry by 18.48 per cent, apparel industry by 17.05 per cent, transportation equipment industry by 14.44 per cent, and food industry by 13.93 per cent.

The manufacturing industry also recorded 4.5 per cent growth of export or US$32 billion in the first quarter of 2018, from US$30.6 billion in the first quarter of last year.

Indonesia also booked the highest level since June 2016 of Purchasing Managers Index (PMI) in May 2018 at 51.7. It was slightly higher than the PMI in April 2018 that reached 51.6.

The PMI growth in May was driven by a significant growth in new orders in May, the strongest since July 2014, and raise of production rate during last four months, the longest expansion period over the last five years.

However, Indonesia’s manufacturing sector still suffers deindustrialization after Asian Crisis in 1997. The portion of the manufacturing sector in Indonesia to the exports significantly decrease from 59 percent in 2000 to 41 percent in 2013. But it heavily relies on the resource-rich industries and only half-finished product with the low technology. In addition, The manufacturing sector growth in the GDP tends to decrease from 6.26 per cent in 2011 to 4.74 per cent in 2017.

Email: fauzulmuna@theinsiderstories.com