Bata Shoe Factory in Purwakarta Closes, President: That's Part of Market Dynamics

In the midst of optimism for national economic growth of 5.11 percent, there are factories closing, including the Bata shoe factory.

KOMPAS/MAWAR KUSUMA WULAN

President Joko Widodo gave a press statement after inaugurating the Indonesia Digital Test House (IDTH) at the Telecommunications Device Testing Center in Depok, West Java, on Tuesday (7/5/2024).

JAKARTA, KOMPAS — In the midst of national economic growth which was recorded at 5.11 percent in the first quarter of 2024, there are still several businesses and factories that are forced to close and go out of business. Responding to the closure of several manufacturing factories in the country, such as the Bata Shoe Factory in Purwakarta, West Java, President Joko Widodo stated that such fluctuations were part of market dynamics influenced by competition, efficiency and adaptation to new goods.

"If the problem is that a factory closes, a business rises and falls because of competition, perhaps because of efficiency, and also because it competes with new, more innovative goods. "There are many things, but what is clear from a macro perspective is that our economic development is very good 5.11," said President Jokowi answering the press after the inauguration of the Telecommunication Equipment Testing Center (BBPPT), Depok City, Province West Java, Tuesday (7/5/2024).

According to the President, this also shows the resilience and potential of the domestic market as well as investor confidence. "I think those two things (consumption and investment) are very good," he said.

Also read: Factory Closes, Bata Shoe Store Operates Relying on Imported Products

Previously, several companies were reported to have closed their businesses and factories. One of them is PT Sepatu Bata Tbk, which closed its factory in Purwakarta, West Java, on April 30, 2024. The decision to close the business and factory of PT Sepatu Bata is not unrelated to the losses that the company has been experiencing all this time.

If there are issues with factories closing down, a business may rise or fall due to competition, efficiency, as well as competing with new, innovative products. There are many factors, but clearly, in macro terms, our economic development is very good at 5.11.

KOMPAS/MAWAR KUSUMA WULAN

President Joko Widodo gave a press statement after inaugurating the Indonesia Digital Test House (IDTH) at the Telecommunications Device Testing Center in Depok, West Java, on Tuesday (7/5/2024).

Economic optimism

Regarding the condition of the national economy, President Jokowi expressed his optimism. Currently, economic growth is recorded at 5.11 percent in the first quarter of 2024. Moreover, this figure is achieved by Indonesia at a time when many large countries are experiencing recession or a decline in growth.

"Yes, this creates optimism that other countries, big countries, have entered the brink of recession. "Other countries also had their growth decrease, but we were able to grow at 5.11 percent," said the President.

Previously, when giving directions at the National Development Planning Consultation Meeting (Musrenbangnas) for 2024, in Jakarta on Monday (6/5/2024), President Jokowi also emphasized that the global economic situation is currently not easy. The global economic growth is estimated to only reach 3.2 percent. The lingering effects of the Covid-19 pandemic are still being felt until now.

The Central Statistics Agency (BPS) said that Indonesia's economic growth in the first quarter of 2024 was recorded at 5.11 percent on an annual basis (year-on-year). This growth is the highest since 2015.

Meanwhile, the President added, several countries have entered into economic recession such as Japan, England, and some countries in Europe. "I think we should be grateful for the economic growth, which is largely supported by consumption. But it is also supported, secondly, by investments that continue to enter our country," said President Jokowi.

Yes, this raises optimism that other countries, large countries, have entered the brink of recession. Other countries also had their growth drop, but we were able to grow at 5.11 percent.

This increase in growth is an indication that, despite facing global challenges, Indonesia remains a strong economy and continues to attract investments that have a positive impact on national economic growth.

KOMPAS/PRIYOMBODO (PRI)

Shoppers buy chicken at the intermodal modern market in BSD, Cisauk, Tangerang Regency, Banten, on Saturday (4/5/2024). The annual inflation pressure on food prices began to ease in April 2024.

Multiple Effects

President's Special Staff for Economic Affairs, Arief Budimanta, also responded to the BPS report which stated that the first quarter economic growth in 2024 grew by 5.11 percent (y-o-y). Household consumption expenditure grew by 4.91 percent (y-o-y), government consumption by 19.90 percent, investment by 3.79 percent, and export grew by 0.50 percent followed by a growth in imports by 1.77 percent.

According to Arief, the acceleration of growth in the first quarter of 2024 is supported, among other things, by the improvement of household consumption growth which grew by 4.91 percent (y-o-y). This comes after a slowdown in the fourth quarter of 2023 which only saw a growth of 4.47 percent (y-o-y).

However, our economic growth is still dominated by household consumption. For this quarter, out of the 5.11 percent national economic growth, more than half or precisely 2.62 percent is contributed by household consumption.

"Nevertheless, our economic growth is still dominated by household consumption. For this quarter, out of the 5.11% national economic growth, more than half or precisely 2.62% is contributed by household consumption," said Arief on Monday (5/6/2024).

Government spending also grew high, namely up to 19.90 percent (y-o-y) in the first quarter. This growth in government spending is expected to provide a longer and larger multiplier effect on economic growth until the end of 2024.

KOMPAS/WILIBRORDUS MEGANDIKA WICAKSONO

The rice plants in Karangrau Village, Sokaraja, Banyumas, Central Java, were damaged by brown planthopper pests on Tuesday (7/5/2024). Farmers failed to harvest and suffered millions of rupiah in losses due to the brown planthopper pest.

Thus, the growth of the economic sector must also be able to create job opportunities that can maintain and boost household consumption growth.

Arief added that the economic growth is fairly distributed sectorally, especially in the food and beverage accommodation sector, mining and excavation, transportation and warehousing, as well as information and communication that are growing above 8 percent (y-o-y). However, the agriculture, forestry, and fisheries sector, on the other hand, experienced a contraction of -3.54 percent compared to the first quarter of last year 2023.

Also read: The Economy is Growing, but Not Yet Stable and Quality

This means that even though Elnino has begun to subside, its impact on production or the economy in the agricultural sector in particular still needs to be anticipated so that it does not spread and can immediately rebound in the second quarter. In the future, purchasing power and household consumption cannot be separated, let alone ignored, in the development of the Indonesian economic sector.

"Thus, the growth of the economic sector must also be able to create job opportunities that can maintain and encourage household consumption growth," said Arief.