Businessman Shouts Exports Down: Business actors began to complain about the decline in demand in the export market due to the weakening of the world economy. Even the textile and shoe industry has reduced the number of workers, aka layoffs. Minister of Finance (Menkeu) Sri Mulyani Indrawati understands that export demand is affect by the economic downturn in developed countries. Although manufacturing performance is still expansive.
Indonesia’s manufacturing Purchasing Managers’ Index (PMI) in October was at 51.8. A position above 50 indicates the manufacturing sector is in an expansionary phase. In terms of manufacturing. We are actually still good that we are above the expansion zone. Although lower than last September. We really estimate that. From the demand side. Exports will indeed experience an impact with the possibility of weakness in developed countries.” Sri Mulyani said when met at the Office of the Coordinating Ministry for the Economy.
1. The government will boost domestic demand
Due to the slowdown in export demand, the former World Bank Managing Director will try to boost domestic demand. Although the decline in demand from abroad cannot be fully substitut by domestic demand. “So, we will continue to look at all of these sectors and then what policies we need to formulate further in responding to global trends,” said Sri Mulyani.
The government continues to pursue policies that can maintain economic recovery, which in the fourth quarter due to weakening conditions in western countries, it is necessary to reformulate. Fiscal policy is inde aim at spending the allocated allocation. So we hope that it can support domestic demand at a time when global economic demand is weakening due to high inflation, a strengthening exchange rate, which of course will also cause changes in economic performance. – the economy in Europe, America and China,” he said.
2. VAT discounts and salary subsidies can grow people’s purchasing power
Economist and Director of the Center of Economic and Law Studies (Celios), Bhima Yudhistira assesses that the government can help strengthen people’s purchasing power by lowering the value added tax (VAT). Irst, of course, the government must relax taxes to encourage domestic consumption, for example reducing the VAT rate from 11 percent to 7 or 8 percent. Because when the export market is sluggish or sluggish, the hope is from the domestic market. The domestic market will certainly move. if supported by tax relaxation.
The wage/salary subsidy (BSU) program is also recommend by Bhima to be continu. Even if the value of the assistance and the number of recipients is increas. Especially for informal workers who have not been touch by BSU. “I think the most important thing is to expand the wage subsidy. The amount must be add. The nominal is increased, the recipients are also add. Especially to the MSME industry which does not have BPJS Employment,” he explained.
3. Tens of thousands of workers have become victims
A total of 22,500 workers in footwear or shoe factories have been laid off due to declining demand in foreign markets. Because the world is experiencing an economic downturn. Meanwhile, our figures are around 22,500 workers (affected by layoffs),” said the Executive Director of the Indonesian Footwear Association (Aprisindo).
He explained that since the beginning of the second semester of 2022, several factories have experienced a decline in orders of around 40 to 50 percent. It will continue until next year, at least orders will be cut by 50 percent until the first semester of 2023. Chairman of the Indonesian Textile Association (API).
Jemmy Kartiwa said that the decline in export demand has occurred since August and is now in the range of 30 percent. If conditions do not improve, the decline will be even sharper until the end of the year. In practice, employees are not only laid off, there are also those whose contracts are not extended or in other words experience the same thing as termination of employment.