Mustaqim Adamrah and Aditya Suharmoko, Jakarta – The manufacturing sector grew slower in the third quarter of the year, due to a decline in output in some of the country's top industries such as garments and machinery, Central Statistics Agency (BPS) data says.
The BPS announced Monday that the manufacturing sector posted a meager 1.6 percent growth in the third quarter from a year earlier, slowing down from 3.3 percent and 5.85 percent in the second and first quarters, respectively.
The garment and textile sector is among the hardest hit, with output during the three-month period ending September dropping by a staggering 30.61 percent from the same period last year.
Machinery and equipment industries declined by 17.30 percent, while chemical and chemical-based industries were also down by 12.96 percent, the report said.
The BPS report contradicted earlier reports by the Trade Ministry, which had estimated that the manufacturing sector grew by 3.85 percent to 4 percent in the third quarter of this year, compared to the same period last year.
In response to the BPS' reports, the ministry's secretary-general Agus Tjahjana said the drop mostly reflected sluggish demand for exports. "I believe exports are the major factor in the drop," he told The Jakarta Post.
"You see, textile and garment exports are sensitive due to the sluggish global market," he said, referring to the ongoing global financial crisis which has helped push the United States – the world's largest economy – into recession, with European nations, Japan and Singapore apparently following suit.
In September, exports of garments and textiles dropped by US$30.2 million. Garment and textile producers earlier estimated this year's total exports would total around $10 billion, around the same figure booked last year, as demand from the US – which absorbs 33 percent of the country's textile exports, would decline.
Agus warned that the impact of the global downturn would remain to be felt in the months to come.
Agus also said that the wood-based products industry was also declining, as a result of logging restrictions and the slowdown in the global market.
On industry overall, he hoped that the manufacturing sector would still grow in the fourth quarter, propelled by normally higher demand during the traditional high season of Christmas and the New Year.
BPS head Rusman Heriawan however was convinced Indonesia's exports would start to feel the pinch from the global crisis during the fourth quarter.
Exports to the US are predicted to decline in the fourth quarter of 2008 now that the country is in recession, Rusman said.
Between January and September, Indonesia's main exports destinations were Japan with $10.42 billion (12.51 percent), the US with $9.74 billion (11.70 percent) and Singapore with $7.96 billion (9.56 percent).
From January to September, however, total value of exports surpassed $107.65 billion, a 29.69 percent increase from the same period in 2007. Exports were dominated by industrial products (63.84 percent) and oil and gas products (22.62 percent).
Imports meanwhile, stood at $101.09 billion in the same period. Imports of non-oil and gas products mostly came from China with $11.51 billion (11.39 percent), Japan with $10.45 billion (13.32 percent) and Singapore with $8.64 billion (8.55 percent).