Khoirul Amin, Manila – The country's non-oil and gas manufacturing industry is forecast to remain stagnant in the last quarter of this year as most of the government's economic policy packages will not have had an affect on the country's economy by that time, the Industry Ministry's top official has said.
Industry Ministry secretary-general Syarif Hidayat said recently in Jakarta that he projected that manufacturing industry growth would rise by around 5 percent in the fourth quarter of this year, the same as that of the previous quarter. "The effects of the government's economic packages are not going to show instantly," he said.
The government has issued six economic policy packages, ranging from deregulation to electricity price cuts, designed to boost growth amid current economic slowdown.
In the third quarter of this year, non-oil and gas manufacturing industry grew by 5.2 percent, a drop from 5.73 percent growth in the same period last year.
Machine and equipment industry recorded the highest growth with 14.98 percent in the third quarter of this year, a surge from only 7.24 percent in the third quarter of 2014.
According to Syarif, the surging growth in the sector can be attributed to a growing national demand for locally made machinery and equipment by expanding small to medium sized enterprises.
Local machinery and equipment companies might also obtain benefits from the strengthening US-dollar exchange rate as they export their products overseas, Syarif said.
Meanwhile, the textile and garment sector has posted the lowest growth at minus 6.14 percent in the third quarter of this year, compared to 1.38 percent in the same period last year, resulting in massive layoffs in the sector.
As many as 46,000 workers in the garment and footwear sector were laid off during the first nine months of this year, according to data from the Manpower Ministry.
Overall non-oil and gas manufacturing industry accounted for 17.82 percent of the country's total gross domestic products (GDP) in the third quarter of this year, relatively similar to its contribution for the same period of last year. The contribution is still expected to expand.
Syarif added that while the industry would still grow in the fourth quarter, it would be far lower than the initial target of 6.8 percent.
However, as the country's economic growth was relatively low, moderate industry growth would help to prevent more layoffs during the quarter. Layoffs nationwide hit a total of 79,425 workers as of September this year.
Syarif argued that positive impacts on the country's industry could show immediate effect if the government issued policy packages that directly affected industry players. Policy packages such as tax allowance on income tax, for example, would instantly improve industry growth as it would support business efficiency.
The Association of the Indonesian Automotive Manufacturers (Gaikindo) secretary general Noegardjito said previously that he expected national auto sales to improve next year if national economic growth could hit 5.6 percent on the back of the government's policy packages – which are expected to start showing impact next year.
Indonesia's car sales hit 853,292 units in the first ten months of this year, far lower compared to 1.04 million units during the same period last year.