The Central Statistics
Agency (BPS) recorded a decline in the growth of large and medium manufacturing
industry in the first quarter of 2015 by 0.71% compared to October-November
2014. BPS noted that the weakening of the industry in the early part of the
year was because it is affected by government expenditure pattern which is low
in the beginning of the year. Statistics recorded that from 33 large and medium
manufacturing industry sectors, 16 industry sectors experienced a decline in
quarterly growth.
The largest decline is experienced by non metallic
mineral product industry by 6.64%, followed by electrical equipment industry at
4.74%, and non wood furniture industry at minus 4.38%. A total of 21 cities
recorded a decline in manufacturing performance in the first three months of
2015. The highest occurred in Bengkulu at minus 8.85% and Bangka Belitung at
minus 7.39%.
Chairman of the Indonesian Employers association
(APINDO), Anton J. Supit, in Jakarta, on Tuesday (May 5), admitted that the
real sector performance deteriorated during the first quarter of 2015. APINDO
reported that the sharpest decline is experienced by property and hotel
sectors, i.e. up to 40%. Retail sector plunged 25%, followed by automotive
sector at 20%, followed by automotive sector at 20%. Food and beverage sector
which is usually immune to economic shocks, this time contracted 10%. APINDO
also highlighted tax revenue target which is too high for the sake of
government’s ambition to accelerate development in a short time. The too high
target eventually distorts the company, including the business community.
According to anton, BPS data showed that industrial
growth in the first quarter of 2015 slowed from the previous quarter, and this
is proof that the development programs undertaken by the government is not in
accordance with the needs of the business community. He said that the decline
in purchasing power is compounded by sluggish global economic conditions.
Nevertheless, the global economic slowdown should not be a reason for the
decline in domestic industrial growth. The main problem which until now
suppress the growth of the domestic industry is bad investment and business
climate, legal uncertainty, poor infrastructure, and weak support of local
government as the land owner for the industries.
Anton pointed out that in spite of the sluggishness of
the global market, world demand for shoe products remain USD 200 billion per
year, while until now the value of Indonesian exports is only USD 4 billion,
far less than Vietnam which is able to increase exports to USD 10 billion. Not
only that, in the textile market, the value of global textile demand each year
reached USD 700 billion, while Indonesia
was only able to contribute 1.8% or exported USD 1.3 billion.
He also sees that in an effort to attract foreign
investment, the government has no clear design of priority industries.
Currently, Indonesia requires more labor-intensive industries that absorb a
large number of workforce rather than capital-intensive industries that require
highly educated workforce. Because the majority of Indonesian workers are in
that if the government attracts many capital-intensive investments, unemployment
rate will increase because job vacancies are occupied by foreign professionals
when ASEAN Economic Community is implemented.
Meanwhile, the Ministry of Industry said it will correct
the manufacturing industry growth target in 2015 if the decline in growth in
the first quarter of 2015 at 0.71% continues until the second quarter of 2015
(q-to-q). Syarif Hidayat, acting Secretary General of the Ministry of Industry,
said that the decline in growth in this period was due to the decline in
purchasing power in line with the slowdown of macroeconomic growth that
resulted in production decline. Moreover, the high price of energy production
has pressured the performance of the industry. Currently investors are still
making calculation because of weak market demand. After the second quarter of
2015, there will be no adjustment or target correction from 6.1% for 2015. (E)
Business New -May 8, 2015
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