Manufacturing activity in the country showed a positive trend at the start of 2025. This can be seen in Indonesia's Manufacturing Purchasing Managers' Index (PMI) released by S&P Global. Indonesia's manufacturing PMI for January stood at 51.9, up 0.7 points from 51.2 the previous month. This expansionary phase is the highest point since May 2024.
“Alhamdulillah, this means our industry players are enthusiastic as they enter 2025. With industry players' high confidence in continuing their businesses, we are also optimistic that the national economy can grow positively,” the Ministry of Industry spokesperson, Febri Hendri Antoni Arief, said in an official statement in Jakarta on Monday (3/2).
The Kemenperin spokesperson said the upturn in manufacturing was marked by increased purchases of raw materials to meet a surge in market demand in the following months. Productivity currently looks solid and is expected to supply both domestic and export markets.
According to the S&P Global report, with this high production activity, a number of companies decided to hire in January, increasing their workforce for two months running. “This proves that when industrial activity picks up, it has a positive impact on employment. This is in line with the government's efforts to encourage job creation,” Febri said.
Even so, Kemenperin believes Indonesia's manufacturing PMI could be higher if the import relaxation policy for finished goods were revoked. In addition, strategic and pro-business policies are needed so that manufacturers in Indonesia can perform even better. Moreover, the manufacturing sector has been the backbone of national economic growth.
“So, to achieve the national economic growth target of 8 percent, we need policies and stimulus that can encourage our industry players to be more active in running their businesses,” Febri added.
These policies include extending the HGBT program, strengthening P3DN, evaluating the import relaxation policy, and providing fiscal and non-fiscal incentives for industry. These policies will secure raw material needs, increase investment and exports, boost industrial competitiveness and optimize local products in the domestic market.
“Many industry players receiving HGBT appreciate President Prabowo's policy of extending the HGBT program. Meanwhile, industry players are still waiting for the import relaxation policy to actually be revoked,” the Kemenperin spokesperson stressed.
In addition, Kemenperin is consistently continuing its industrial downstreaming policy. This is in line with one of the missions of the Asta Cita of President Prabowo Subianto and Vice President Gibran Rakabuming Raka, especially the fifth point: continuing downstreaming and developing natural resource-based industries to increase domestic added value.
The positive performance recorded by manufacturing throughout 2024 includes non-oil and gas processing industry exports worth USD 196.54 billion, accounting for 74.25 percent of total national exports of USD 264.70 billion. Besides being the largest contributor, manufacturing export value last year rose 5.33 percent compared with 2023.
Next, realized manufacturing investment throughout 2024 exceeded IDR 721.3 trillion, accounting for 42.1 percent of Indonesia's total realized investment of IDR 1,714.2 trillion. Manufacturing's contribution to investment in 2024 was also the highest of any sector, up sharply from IDR 596.3 trillion in 2023.
Indonesia's manufacturing PMI in January 2025 surpassed those of Taiwan (51.1), South Korea (50.3), China (50.1), the United States (50.1), Thailand (49.6), Vietnam (48.9), Japan (48.8), Malaysia (48.7), Myanmar (47.4), the United Kingdom (48.2) and Germany (44.1). “In ASEAN, Indonesia is the only country whose manufacturing PMI expanded further in January 2025 compared with December 2024. Many others fell, while Malaysia rose but remains in contraction,” Febri explained.
Commenting on Indonesia's manufacturing PMI in January 2025, Paul Smith, Economics Director at S&P Global Market Intelligence, said Indonesia's manufacturing sector expanded at the start of the year, supported by a simultaneous rise in output. It also reflected industry players' confidence about future conditions.
Industry players in Indonesia are optimistic that production will keep rising, supported by improving market demand this year. This momentum will encourage companies to add workers. “Companies also increased purchasing activity and raised inventory levels,” he said.
Source: Press Release of the Ministry of Industry of the Republic of Indonesia