Indonesia's manufacturing index in August 2023 was at 53.9. This figure increased by 0.6 points compared to the previous month which was recorded at 53.3. Indonesian Strategic and Economic Action Institution Senior Analyst Ronny P Sasmita said, even though the manufacturing sector is the biggest contribution to Indonesia's economic growth, the numbers have still not returned to the glory era of the manufacturing sector 20 years ago. He said the manufacturing sector continued to decline to below 20% because several manufacturing subsectors experienced deindustrialization, especially the textile sector.

"Today, the contribution remains only around 18 percent, where this sector once contributed around 31.9% in 2022," said Ronny, Friday (1/9).

Therefore, he asked the government not to just be complacent with the Manufacturing PMI figures which continue to improve, but also to be determined to return the manufacturing sector to a figure above 20%.

This aims to encourage increasingly high-quality economic growth because the manufacturing sector is both capital-intensive and labor-intensive.

He believes that by increasing the contribution of manufacturing to economic growth, Indonesia's labor absorption capacity per one percent of growth or incremental labor output ratio (ILOR) will automatically increase again.

"And employment opportunities will become wider to keep up with the large growth in the workforce every year," he said.

Meanwhile, Secretary General of the Indonesian Olefin, Aromatic and Plastic Industry Association (Inaplas) Fajar Budiono said the increase in Manufacturing PMI in August 2023 came more from the food and beverage industry (mamin).

"Yes, it's the food and beverage industry, because it's summer. It seems like people tend to snack a lot on food and drink," explained Fajar.

However, he sees concerns that the Manufacturing PMI will decline again at the end of the year. In fact, he estimates that the Manufacturing index at the end of the year will not be as good as last year's achievements.

This concern arises because of the weakening purchasing power of people in China which has the impact that finished goods from that country will enter the country. Therefore, he hopes that the government can immediately take a stance and decide to protect the domestic manufacturing industry.

"This is an indication that China's purchasing power is weak, the impact is that finished goods will run to Indonesia, because they will continue to produce," he said.

Moreover, it is also feared that the high tension between Russia and Ukraine and the weakening of China's economy will further erode global demand at the end of the year.