Downstream Industry Becomes the Key to Economic Growth

VIVA – The non-gas processing industry sector in Indonesia is still doing well at the beginning of the year, it can be seen from the results of the S&P Global survey which reported that Indonesia's Manufacturing Purchasing Manager's Index (PMI) in January 2023 was 51.3 or in an expansionary stage because it was above the 50.0 level.

"Indonesia's manufacturing PMI in January 2023 increased compared to December 2022 which was at 50.9," said Industry Minister Agus Gumiwang Kartasasmita in Jakarta, on Wednesday, February 1, 2023.

The industry minister said the increase in Indonesia's Manufacturing PMI was due to an increase in the level of output and new demand, "This means that industry players are still optimistic and respond positively to several policies and national economic conditions, so they are expanding activities for production to fulfill the needs of the domestic and export markets," he explained.

Therefore, Minister Agus gave his appreciation to the manufacturing industry players in Indonesia which are increasing. Moreover, the global pressure from the economic side began to subside.

Minister Agus also stated that the downstream industry policy is the key to economic growth. Therefore, the government consistently carries out industrialization in an integrated manner from upstream to downstream.

"This is what will drive the leap from developing countries to developed countries. So, to become a developed country, we must not be afraid to downstream the raw materials in our country," he stated.

The positive impact of downstream has been proven in the mineral and coal sector, for example, the export value of nickel raw materials from Indonesia increased from IDR17 trillion to IDR450 trillion in 2022, which is exported in the form of processed nickel products.

"This means that there is a very large increase in added value due to the effect of downstream," Agus explained.

The government will also gradually stop exporting raw materials that have the potential to be developed in Indonesia, "After stopping nickel exports, the government will also gradually stop exporting bauxite, then later stop tin. Because by producing the finished product, the added value can increase hundreds of times," he said.

Regarding the achievement of Indonesia's manufacturing PMI in January 2023, Economics Associate Director of S&P Global Market Intelligence Jingyi Pan said, Indonesia's manufacturing PMI at the beginning of this year showed improvement. Especially both output and new demand increased in January 2023 at the fastest pace for three months with fractionally better growth in terms of sales.

Indonesia's January 2023 manufacturing PMI surpassed those of ASEAN (51.0), Malaysia (46.5), Vietnam (47.4), and Myanmar (49.6). It is also higher than South Korea (48.5), Japan (48.9), Taiwan (44.3), China (49.2), the European Union (48.8), and the United States (46.8).