Jakarta, Jan 31 (Antara) -- It is believed that the Indonesian market
will have the most potential in the region, following the commencement
of the ASEAN Economic Community (AEC) at the end of 2015.
This
certainty is keeping in mind that Indonesia is the largest member state
of the ASEAN, with a population of more than 240 million.
Therefore, Indonesia should increase its competitiveness, if it wants
its market to play a major role in the region and prevent the flood of
products from other ASEAN nations into the country.
"With the observation that Indonesia's economic growth prospects are
likely to remain positive, the country will become an important target
market for various member countries of the ASEAN," Dean of Gadjah Mada
University's Faculty of Social and Political Sciences, Erwan Agus
Purwanto, said.
He pointed out that with its gross domestic product being the largest
in the region, Indonesia will become the target market for Malaysia,
Thailand, Singapore, and other ASEAN countries.
So the government should continue to optimize its strategic plan to
build community preparedness to face the regional competition among the
ASEAN countries, Purwanto stressed.
In the wake of this regional competition, the Indonesian manufacturing
sector can serve as the country's competitive edge.
According to Finance Minister Bambang Brodjonegoro, the manufacturing
industry can help Indonesia compete in the regional level when the AEC
commences.
"With
regard to competition in goods, I am optimistic because Indonesia has
three sectors in the manufacturing field that can contribute," he stated
while addressing a seminar on the AEC on Friday night.
He added that Indonesia should develop competitiveness among goods at
home so that local products can build a comparative advantage against
goods from other countries, particularly those from Thailand, Malaysia
and the Philippines.
So the manufacturing field can serve as a new, reliable sector that
could produce mainstay downstream goods for Indonesia. After all, the
products made from natural resources in Southeast Asian countries do not
have much difference.
The three fields in the manufacturing
sector that could be developed in Indonesia are those of natural
resources, goods for consumption, and import substitution products.
The development of the natural resources sector is a must because so
far, Indonesia has exported a considerable amount of raw materials, such
as cacao, crude palm oil (CPO), rubber and nickel, without enjoying any
added values.
"For
instance, China imports nickel from Indonesia to feeds its numerous
smelters, which is how it enjoys added values. Any country with a
successful manufacturing sector can have a strong steel industry. So if
we develop our downstream industries, we will not have any competitors
in the ASEAN region," the minister explained.
In the consumption-based manufacturing sector, wherein goods are
produced in large volumes, such as the automotive industry, Indonesia
has a chance to compete because it already has factories that produce a
type of family vehicles.
"This adopts the Chinese approach because the higher its output, the
better the economic scale it will enjoy. At present, the number of
industries to meet the demands of Indonesian consumers is increasing.
They see Indonesia as a new market, particularly for commercial
vehicles," Brodjonegoro noted.
Furthermore, the import substitution manufacturing sector is closely
related to infrastructure development, such as that of ports and
electricity plants. It is impossible for Indonesia to continue to import
supportive components.
"It
is useless to build shipyards if we do not have ships. Rather than
importing them, it would be better to develop ship substitutions,
particularly large-scale ships. With regard to power plants, industries
will thrive if Indonesia can develop boilers, turbines and
transformers," the finance minister affirmed.
He added that if Indonesia can make improvements in the three
manufacturing sectors, its high-quality products will enable it to
compete in the regional and global markets.
Besides the manufacturing sector, the insurance industry in the service
sector can also compete in the AEC. According to Commissioner of the
Indonesia Financial Services Authority (OJK) Firdaus Djaelani, the
national insurance industry can stand out in the AEC in four ways.
"First,
domestic insurance companies must develop good corporate governance
(GCG)," Djaelani, who oversees the non-banking financial industry,
stated, adding that GCG should be adopted to mitigate the risks in the
financial industry.
Indonesia has the largest insurance
market among the ASEAN member states. With a population of about 240
million people, Indonesia constitutes 30 percent of the market in the
region.
The second way would involve increasing the
capacity of human resources, Djaelani noted, adding that the Malaysian
insurance industry had a highly competitive human resources capacity.
"Our industry depends on its human resources. We are not real sector companies," he remarked.
The third method, Djaelani observed, would be strengthening the capital of insurance companies.
In recent years, the insurance industry has developed and demonstrated a
dynamic variety of products. He added that by strengthening capital, a
product capable of being a leader in the market could be
publicized.
Improving the standardization of various
aspects of insurance companies would be the fourth way; the
standardization of actuaries, for instance.
In addition, Minister Brodjonegoro emphasized on the importance of
revamping the country's economic fundamentals to face the AEC.
"We
have to look at the positive aspects of the AEC. Such positive impacts
can only be realized if the country's economic fundamentals are
revamped," the finance minister stated.
He added that the challenges that Indonesia is facing in terms of its
economic fundamentals include the balance of current transactions, which
are still experiencing a deficit.
This is different from the situation in neighboring ASEAN countries,
such as Singapore, Thailand, Malaysia and the Philippines, which have a
surplus balance in their current transactions.
"Other
countries have high export capabilities, except the Philippines, which
is supported by the income repatriation of its workers abroad. The
influx into the Philippines is big," the minister pointed out.
Besides having to settle its current account transactions, Indonesia
should also overcome its high inflation rate that has been surging the
last two years. Fuel subsidy expenditure can be attributed to this high
inflation.
"Our
inflation rate has always been higher as compared to those of these
other countries. The Philippines, which is more or less comparable with
Indonesia, always has a lower inflation rate because it does not have to
deal with issues related to fuel oils. So if prices fluctuate to a high
or low level, Filipino consumers are already accustomed to it," he
added.
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(T.A014/INE/B003)
EDITED BY INE
(T.A014/A/BESSR/Bustanuddin) 31-01-2015 18:16: |
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