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RI Industry Experiences Scarcity of Imported Raw Materials, Layoff Alarm Sounds Loudly

The Indonesian Employers’ Association (Apindo) claims that domestic industry is experiencing a shortage of imported raw materials.
Deputy General Chairperson of Apindo Sanny Iskandar said this had an impact on decreasing production output.

Just look, S&P Global data recorded that Indonesia’s manufacturing Purchasing Manager’s Index (PMI) fell to 51.5 in October 2023. Indonesia’s manufacturing PMI slowed by 0.8 points compared to September 2023 which reached 52.3.

The manufacturing PMI rate in October 2023 is the lowest since May 2023 or the last five months.

“The scarcity of raw/auxiliary materials (especially those that still have to be imported) for the manufacturing industry has resulted in a decrease in the amount of production,” said Sanny to CNNIndonesia.com, Wednesday (1/11).

According to Sanny, this shortage is also in line with industrial players who are still waiting for the implementation of Government Regulation (PP) Number 46 of 2023 concerning Amendments to Government Regulation Number 28 of 2021 concerning the Implementation of the Industrial Sector.

Sanny also said that if the decline in Indonesian industrial production continues to decline, a wave of layoffs (PHK) will be inevitable.

In other words, the decline in manufacturing PMI is also a signal that a wave of layoffs is coming soon.

“If (the decline in industrial production) continues for a long time, of course there could also be (layoffs),” said Sanny.

S&P Global noted that the decline in Indonesia’s manufacturing PMI was mainly due to slower sales growth in October.

The agency assesses that producers are experiencing weaker demand conditions. In addition, foreign demand also worsened.

Economics Associate Director of S&P Global Market Intelligence Jingyi Pan said the slowdown in Indonesia’s manufacturing PMI could still continue.

“The level of business confidence among producers has also fallen far below average, indicating reduced optimism regarding production over the next 12 months,” he said in an official statement.

Just like Sanny, Pan also projects that the slowdown in production will result in a wave of layoffs or at least limit employment opportunities.

“As a result of slower sales growth, companies reduced their employment levels slightly,” he said.

Source: CNN Indonesia