Indonesia’s Manufacturing Sector Remains Relatively Stable in August 2026

RRI.CO.ID, Jakarta: Indonesia’s national manufacturing industry remained relatively stable in August 2026 amid shifting demand and intensifying market competition. This was reflected in the Indonesia Manufacturing Purchasing Managers’ Index (PMI) compiled by S&P Global, which stood at 49.8 in August 2026, slightly down from 50.2 in July 2026.

Ministry of Industry Spokesperson, Febri Hendri Antoni Arief, said the marginal movement in the PMI in August was mainly driven by production adjustments and workforce efficiency measures amid intense competition in the domestic market. Nevertheless, several strong positive indicators pointed to the resilience of the national manufacturing sector and its potential for a swift recovery.

“Manufacturing PMI in August did return slightly below the 50 level. However, we also saw a modest increase in new orders and continued improvement in business confidence. This shows that industry players still see fairly good market prospects ahead,” the Ministry of Industry spokesperson said in an official statement in Jakarta on Tuesday, September 1, 2026.

According to the S&P Global report, new orders increased slightly for the first time in three months. Meanwhile, business optimism continued to improve in August, reaching its highest level in seven months. Surveyed businesses expected stronger demand and stable market conditions to support higher production over the next 12 months.

“This improvement in confidence and optimism is an important foundation for industries to maintain production continuity while capturing increasingly open market opportunities. The government will continue to ensure that the business climate and industrial policies support efforts to enhance the competitiveness of Indonesia’s manufacturing sector,” he added.

One increasingly important opportunity for Indonesia’s industries comes from the European Union market, particularly as Indonesia and the EU move forward with the signing and ratification process of the Indonesia-European Union Comprehensive Economic Partnership Agreement (IEU-CEPA). The agreement is a strategic instrument to expand access for Indonesian products to the European Union market while enhancing the competitiveness of national products globally.

The signing of the IEU-CEPA opens up significant market opportunities for a wide range of Indonesian products. A number of commodities and manufactured goods are expected to gain improved market access, including textiles and apparel, footwear, electronics, wood products and processed wood, as well as various other industrial products. The government is also continuing to prepare industry players to meet standards, regulations, and consumer preferences in the European Union market.

“We are taking advantage of lower import tariffs and the alignment of quality standards so that national export products can compete strongly with products from other countries in the European market,” Secretary of the Directorate General of Chemical, Pharmaceutical and Textile Industries, Sri Bimo Pratomo conveyed.

Bimo added that the Ministry of Industry is ready to facilitate assistance on sustainability standards and green certification, including ESG requirements, for businesses in the Chemical, Pharmaceutical and Textile Industries (IKFT). The aim is to ensure that domestically manufactured products can fully comply with the stringent regulations governing the European market.

In addition, Indonesia has also implemented the Technical Consideration (Pertimbangan Teknis/pertek) policy as part of efforts to maintain a balance between smooth business operations and the development of national industrial competitiveness. This has become increasingly important amid global industrial competition, as countries around the world are also adopting policies to protect and develop their domestic industrial capacity.