Jakarta: National manufacturing performance showed a positive performance, with the Indonesian Manufacturing PMI in March 2024 reaching an expansion level of 54.2, up 1.5 points from the previous month. However, behind this positive data, there is a contrast with the reality of factory closures in several industries, such as textiles and textile products (TPT), shoes, and processed rubber.
Factors in Factory Closures:
- Impact of Economic Downturn and Pandemic: The decline in local shoe demand due to the economic downturn and the COVID-19 pandemic is the main cause of the closure of shoe factories for the domestic market.
- Low Production Capacity: Shoe production capacity utilization is still below 50%, indicating suboptimal utilization.
- Business Licensing Constraints: Export-oriented shoe factories that have the potential to expand are hampered by the business licensing process, especially the AMDAL.
- Limited TPT Industry Improvement: The border import lartas policy encourages the downstream textile industry, but the upstream and intermediate industries still need time to recover.
- Layoffs and TPT Factory Closures: TPT production capacity averages 55%, and there are still layoffs and factory closures. KSPN data shows more than 9,000 textile workers were laid off in January–March 2023.
Although the Manufacturing PMI shows optimism, there is a contrast with the reality on the ground, where some industries are still experiencing difficulties and plant closures. Appropriate solutions and policies are needed to help these industries recover and improve their competitiveness.
