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Jakarta Post

Only one third of manufacturers still operating: Govt

  • Dzulfiqar Fathur Rahman

    The Jakarta Post

Jakarta   /   Thu, April 30, 2020   /   08:07 pm
Only one third of manufacturers still operating: Govt Illustration of a car factory. (Shutterstock/File)

Factory activity has collapsed with only one third of manufacturing companies and workers operating at present, a high-ranking official has said.

Coordinating Economic Minister Airlangga Hartarto said on Thursday that 15,000 manufacturing companies were still operating at present out of a total of 40,000 in normal times.

Meanwhile, 4.7 million workers in the manufacturing sector are still working out of the usual 17 million in the sector, which contributes around 20 percent of the country’s gross domestic product, the minister added.

“We hope companies will be back in operation when the situation returns to normal,” Airlangga told an online briefing on Thursday, referring to the COVID-19 pandemic.

Many businesses in the country have temporarily shut down or are functioning at minimum capacity to comply with the government’s stay-at-home order to contain the fast-spreading coronavirus, which has infected over 10,100 people nationwide.

As a result, the country's Purchasing Managers' Index (PMI), a monthly survey of trends in the manufacturing sector, recorded a contraction to 45.3 from 51.9 between February and March, the steepest decline since the survey began in 2011.

Moreover, as many as 2.2 million people are out of work, according to Manpower Ministry data last updated on April 20. More than half are formal sector workers furloughed or laid off by 43,690 firms.

The government has launched tax incentives for the manufacturing industry, including individual income tax exemptions, import tax deferrals and corporate tax discounts.

Earlier in April, the government also launched the preemployment card program, a mix of unemployment benefit and skill-training program, to provide benefits worth Rp 3.5 million (US$236.66) for people whose jobs or small businesses are affected by the outbreak.

“The incentives will be given on the condition there are no layoffs,” said Airlangga, who also serves as Golkar Party chairman. “We hope all the incentives can serve as a cushion to protect our workers.”

The government has also reduced employment insurance payments for companies that keep on their workers. Firms can get 90 percent reductions both for work accident and life insurance payments.

“By easing the insurance payments, we hope companies can fulfil their obligation to pay [the Idul Fitri] holiday bonus,” Manpower Minister Ida Fauziyah said in the same online briefing.