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Jakarta Post

Indonesia's manufacturing industry expansive despite virus spread

  • Marchio Irfan Gorbiano and Eisya A. Eloksari

    The Jakarta Post

Jakarta   /   Tue, March 3, 2020   /   02:07 pm
Indonesia's manufacturing industry expansive despite virus spread A bell is stamped with the identity of the customer and the year of its manufacturing. JP/Magnus Hendratmo (JP/Magnus Hendratmo)

Indonesia’ manufacturing industry is showing signs of strength despite indications of plunging business activity in neighboring countries amid the spread of the coronavirus.

A survey conducted by IHS Markit shows Indonesia's manufacturing Purchasing Managers’ Index (PMI) rising to 51.9 points in February, the first reading marking expansion since June last year. The index was only at 49.3 points in January.

An index reading above 50 points to an expansion, while a value below 50 indicates a contraction.

Read also: Virus puts globalized economy at risk, says OECD chief economist

“Our PMI is looking good now,” said Coordinating Economic Minister Airlangga Hartarto on Monday. “We will continue to improve this situation by easing exports and imports.”

He added that the spread of the pneumonia-like illness had adversely affected manufacturing in other countries, such as China, which saw its manufacturing PMI drop to a record low of 35.1.

“In China, it means that their electronic, pharmaceutical, textile industries have almost stopped,” he said, adding that Indonesia needed to find import alternatives or increase its manufacturing capacity to meet domestic demand.

Around Asia, countries are experiencing a slowdown in the manufacturing industry as the novel coronavirus continues to spread. In South Korea, where the number of virus cases surged to more than 3,500, the PMI dropped to a four-month low of 48.7.

Read also: Asian factories slammed as China’s PMI drops to record low

Meanwhile, Japan’s Jibun Bank index declined to its lowest level since May 2016 to 47.8. Malaysia, Taiwan, Thailand and Vietnam’s PMI readings also dropped below 50.

Finance Minister Sri Mulyani said the ministry would ease import permit procurement and offer tax refunds, especially for raw materials like plastic, textiles, chemicals and steel that Indonesia usually imported from China, for 500 reputable importers.

“If China delays its production due to the coronavirus spread, it will have an impact on Indonesia,” she said, adding that the government would accelerate the import of raw materials for which stocks might be thinning out in the manufacturing industry.