The manufacturing sector continued to improve its performance in the third quarter of 2023. The Central Statistics Agency (BPS) reported that during this period, the manufacturing industry grew by 5.20% year-on-year, surpassing the 4.94% economic growth during the same period. The contribution of the manufacturing industry to the national Gross Domestic Product (GDP) remained the highest and increased to 1.06% from 0.99% in the third quarter of 2022. Nevertheless, the Minister of Industry stated that the contribution of the manufacturing industry to GDP should be much higher. This can be achieved if certain issues, the solutions to which depend on other Ministries/Agencies, are addressed. For example, the Special Price for Natural Gas (Harga Gas Bumi Tertentu, or HGBT) program, which is not running smoothly.
Many industries participating in the HGBT program still receive gas for raw materials and energy at prices above USD 6 per MMBTU. In addition to the price being above USD 6 per MMBTU, the supply is also irregular. This has had an impact on product competitiveness, demand, utilization, and labor. As a result, the poorly functioning HGBT program has also suppressed the growth of the manufacturing industry. The second example is that the tightening of the import of goods has not been optimal. Currently, the domestic market has been flooded with imported goods, both legally and illegally. The inundation of the domestic market with imported products has affected the demand for manufacturing products, industrial utilization, and labor. Weak coordination between Ministries/Agencies has also contributed to the influx of imported goods into the domestic market. "The third example is that the growth of the manufacturing sector could increase much higher than the national economic growth if Ministries/Agencies, Regional Governments, or State-Owned Enterprises (BUMN/BUMD) maximize the realization of Domestic Product Purchases," explained the Minister of Industry. The industrial sector again took the first position or contributed the largest share, 41.2%, to the realization of national investment throughout January-September 2023. In terms of employment, the manufacturing industry also absorbed 19.35 million workers or 13.83% of the total workforce (BPS SAKERNAS data). Based on data released by BPS, the growth of the manufacturing sector in the third quarter of 2023 was driven by strong domestic demand for the Metal Products; Computers; Electronic and Optical Equipment industry, which experienced growth of 13.68%.
