Indonesia's Industrial Confidence Index (ICI) showed a positive trend with an increase in February 2024. The Ministry of Industry reported a rise of 0.21 points, bringing the ICI to a level of 52.56, indicating an expansion phase in industrial activities. This suggests a positive response from industry players to the outcome of the 2024 general elections.
According to the Ministry of Industry's Spokesperson, Febri Hendri Antoni Arif, this increase in the ICI is attributed to the favorable response from industry players to the smoothly conducted elections. The quick count results indicated the victory of the Prabowo Subianto-Gibran Rakabuming Raka pair in a single round, contributing to the optimism of industry players.
Previously, some industry players adopted a wait-and-see approach, but after the elections on February 14, they began to increase production. Additionally, approaching the fasting month of Ramadan and Eid al-Fitr, several industries have already started production to anticipate increased demand.
The food and beverage industry, leather and footwear industry, non-metallic mineral product industry, and pharmaceutical industry are the main drivers of ICI expansion. However, some sub-sectors still have an ICI below 50 points, such as the wood, wood and cork product industry, other processing industries, textile industry, electrical equipment industry, computer industry, electronic and optical equipment industry.
Febri is optimistic that the ICI in March will be higher, driven by increased production and orders. All components of the ICI, including new orders, production, and product inventories, experienced expansion in February 2024.
The increase in new orders is mainly due to increased domestic and foreign orders, procurement of goods/services, and retail sales. However, production expansion slowed due to factors such as a decrease in orders and seasonal factors.
Furthermore, expansion in product inventories increased as industrial products began to be absorbed in the domestic market, and logistics and delivery processes became smoother. Business confidence in their business conditions for the next 6 months also increased, reaching 71.0%.
The majority of optimistic respondents attributed their confidence to government policies/regulations, global and domestic economic conditions, and licensing processes and commodity prices. Meanwhile, the percentage of business players who felt their business conditions would remain stable over the next 6 months decreased slightly, while the percentage of pessimism reached its lowest level since the ICI was released.
Thus, the rise in the ICI in February 2024 reflects the optimism and confidence of industry players in the prospects of the industry in the coming months, supported by satisfactory election results and anticipation of increased demand ahead of the fasting month and Eid celebrations.
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