The nation’s PMI surpassed that of the world's largest manufacturing center, that is China (50.0), and was higher than that of ASEAN (51.0), Malaysia (48.8), Vietnam (47.7), Taiwan (48.6), Japan (49.2), South Korea (47.6), the United Kingdom (48.0), the United States (49.3), and Germany (44.4).
"The expansion phase in March helped extend the period of improvement in the condition of our manufacturing industry for 19 consecutive months. Moreover, the PMI growth rate in March was the fastest since last September," Minister of Industry, Agus Gumiwang Kartasasmita, said in a statement issued in Jakarta on Monday.
The minister said that the expansion rate of Indonesia's manufacturing PMI was in line with the results of the March 2023 Industrial Confidence Index (IKI), which also expanded to 51.87.
"Manufacturing PMI and IKI in March 2023 both show that the expansion position is supported by increasing new domestic demand. We are optimistic; with the acceleration in the realization of spending on domestic products, new requests will increase in the next period," he explained.
Kartasasmita said he is expecting the increase in domestic demand to encourage increased output and employment. In addition, vendor performance has increased and transportation has improved.
Related news: Manufacturing PMI in August 2022 indicates more stable recovery: BKF
As a result, raw material inventories have increased and production constraints have reduced.
"This has spurred industrial performance to complete orders more quickly," he explained.
Even though input costs are still increasing, the industry is no longer passing on the increase to the price of products.
Thus, it can be concluded that the PMI expansion cannot be separated from the increase in companies’ internal performance and the government's efforts to maintain the domestic market and improve the industrial business climate.
In addition, supply constraints in Indonesia's manufacturing sector eased further in March, resulting in shorter order fulfillment time. This was supported by better supplier and transportation performance.
Therefore, the Ministry of Industry is focusing on boosting productivity in the industrial sector while strengthening the domestic market by optimizing the use of local products and import substitution.
This effort is in accordance with a direction issued by President Joko Widodo at a domestic product business matching event some time ago.
According to Widodo, the purchase of local products can boost national economic growth and support industrial competitiveness in the country.
Related news: RI's Manufacturing PMI indicative of conducive industry situation
Related news: PMI improvement indicates rise in manufacturing sector: ministry