The manufacturing Purchasing Managers' Index (PMI) figure for January 2021 reached 52.2. This increase indicates that the industry is returning to an expansionary phase and demand is starting to recover, although it is limited. The Indonesian PMI Index, released by the IHS Markit, shows the highest value in the last 6.5 years. In December 2020, the PMI index was 51.3.
“Indonesia's manufacturing sector is still on a recovery path in early 2021, with output growth and new orders among the best in the survey over this decade. This trend provides a further boost of confidence, the highest in four years for figures at the beginning of the year, ”said IHS Director of Economics Markit Andrew Harker, in a statement. As an illustration, the PMI figure is one of the economic indicators created by surveying a number of companies. A PMI reading above 50 indicates the industry is at an expansionary level.
One of the positions of the industry which is currently expanding is conveyed by business actors in the textile and textile products (TPT) sector. According to the Secretary General of the Indonesian Fiber and Filament Producers Association (Apsyfi), Redma Gita Wiraswasta, the textile industry has experienced a significant recovery since the third quarter of 2020, as reflected in the increasing utilization or capacity utilization.
Redma said, in the third quarter of 2020, for example, the utilization of the business sector reached 50 percent. Then, in the following quarter it increased to 75 percent and in early 2021 it grew to 80 percent.
"Several downstream manufacturers, especially fabric producers, are also investing in both expansion and replacement of old machines. Even though it's not too big, this investment has already started, "said Redma to Lokadata.id, Tuesday (2/2). "We project growth in Q1 / 2021 to be back above 3 percent positive."
The Central Statistics Agency (BPS) noted that the textile and apparel industry in the third quarter of 2020 contracted 9.32 percent compared to the same period the previous year (year-on-year / yoy). This figure is better than the previous quarter which was minus 14.23 percent. In the first quarter of 2020, the industry also contracted 1.24 percent yoy.
According to Redma, the stretching of the textile industry earlier this year was the result of the government's serious efforts to control the flood of imported textile products by curbing fake or fake importer-producer identification numbers (API-P). He said, the Ministry of Industry is serious about making import substitution by 35 percent.
Redma said, the textile industry had expanded but demand had not yet recovered significantly due to the implementation of community activities (PPKM) in Java-Bali. Even so, because the imported product has been controlled, the domestic market demand has risen accordingly.
Deputy Chairman of the Indonesian Chamber of Commerce and Industry (Kadin), Shinta Widjaja Kamdani, said that in general the domestic manufacturing industry is more optimistic this year due to a number of positive developments at the national and global levels.
These developments, said Shinta, include the recovery of domestic consumption, the completion of technical regulations on the Job Creation Law, more stable online sales activities, and the stability of demand recovery in the global market.
"Overall, this provides confidence for manufacturers to improve performance although the increase is also realistic in the sense that production performance is closely adjusted to demand growth and is maintained so that it does not flood the market and become a backfire on the company's financial health," said Shinta.
Even so, Shinta admitted that she did not know whether the PMI upward trend would continue in the future. He said the biggest problem at this time was that business actors had not seen a strong push towards domestic consumption, especially during the Chinese New Year 2021 and Ramadan.
"What is clear is that business actors want to resume expansion this year. It's just that we need momentum and confidence in market consumption so that the output of performance expansion is also absorbed by the market and not in vain, "he said.