REVITALIZING MANUFACTURING INDUSTRY

by Andi Abdussalam

Jakarta, Dec 6 (Antara) - Manufacturing industry is one of the country's economic backbones and a main sector that supports national development.          Hence, the government is focusing on spurring the development of the manufacturing industry in order to become a sector that is globally competitive and reliable in promoting national economic growth.          In order to achieve these goals, steps for collaboration and synergy are needed among stakeholders, the government, business actors, academicians, and the community.          "We have just returned to manufacturing industries as a mainstream sector in national development. The Ministry of Industry is not alone in the efforts to carry out industrial development," Minister of Industry Airlangga Hartarto noted through his statement in Jakarta on Wednesday (Dec 5).          Hartarto, who delivered the statement at the High-Level Policy Round Table on Manufacturing Sector Review in Jakarta, explained that the government had launched the Making Indonesia 4.0 Road Map a clear strategy and direction to revitalize the national manufacturing industry to be more competitive in the international arena in the digital era.           "With the implementation of industry 4.0, it is believed that production will be more efficient with good quality," he stated.

"MAKING INDONESIA 4.0" TO FACE INDUSTRIAL REVOLUTION

By Andi Abdussalam

Jakarta, Nov 26 (Antara) - Industrial disruption may take place in the fourth industrial revolution, or Industry 4.0, which would necessitate many countries in the world to make preparations.          In the face of the fourth industrial revolution, the Indonesian government has launched the Making Indonesia 4.0 Road Map as a clear strategy and direction in the readiness to enter and implement 4.0 industry in the country.          The aspiration contained in the Making Indonesia 4.0 Road Map is Indonesia¿s target to be part of the 10 largest economies in the world by 2030, according to Head of Industrial Research and Development Agency (BPPI) of the Ministry of Industry, Ngakan Timur Antara, in Jakarta on Sunday (Nov 25).          The target is achievable because it can be boosted by a 10-percent increase in net exports of the Gross Domestic Product (GDP), two-fold productivity increase, and the creation of 10 million new jobs in 2030.           Hence, the government will remain focused on accelerating the country's industrialization as it will bring multiplier effects to the national economy.          "Therefore, the government is resolved to create conducive investment climate," Antara noted here on Sunday.

GOVT PREPARES STEPS TO FACE INDUSTRIAL REVOLUTION

By Andi Abdussalam

Jakarta, Jan 9 (Antara) - In keeping abreast of industrial technology development and in the face of digitally connected fourth industrial revolution or usually called Industry 4.0, the Indonesian government is preparing steps to take advantage of such developments.          Therefore, the government outlines steps to improve human resources, take advantage of the country's demographic bonus, expand equitable industrial zone development and develop its downstream metal industry.          Industry Minister Airlangga Hartarto has set the four steps in an integrated target to achieve inclusive and sustainable industrial development.          "The first target is that we will continue to develop links and match vocational education to create one million trained workers by 2019," Hartarto noted in written statement in Jakarta on Sunday.          One of the main focus areas of the government in 2018 is to create skilled human resources in the industrial sector. The solution to facing the demographic bonus is vocation, according to the minister who expressed his conviction that a competent industrial workforce will boost productivity and economic growth that will eventually have a positive impact on the people's welfare.          It is necessary to take this strategic step to increase Indonesia's competitive edge at the global level. Essentially, Indonesia is targeted to become the world's seventh-strongest economy in 2030.

INDONESIA TO FOCUS ON DOWNSTREAM INDUSTRY

by Andi Abdussalam

Jakarta, Jan 20 (Antara) - Indonesia will focus on developing its downstream industry to process raw materials and export finished goods with added value in order to catch up with other Asian countries, such as Japan.         To achieve the goal, the government hopes that development of industry should be planned in short, medium and long term in such a way that it becomes a roadmap for the next 100 years.          For this purpose, the government of Joko Widodo (Jokowi)  has established a National Industry and Economic Committee (KEIN), assigned to come up with recommendations and formulate a strategy that will be combined with other concepts for development.         "The combination will enable us to work out details on development planning in the short, middle and long-term. I have asked for a roadmap for the next 50 to 100 years so that we have guidelines that can help us reach our objectives," the president said at the State Palace on Wednesday.          Therefore, KEIN will focus on working out a concept regarding the development of downstream industry where raw materials should be processed in the first place than simply exporting these,

NO MAJOR IMPACT OF JAKARTA BOMBINGS ON INDUSTRY

By Andi Abdussalam

Jakarta, Jan 16 (Antara) - The terror attack in the business and office district in Central Jakarta on Thursday will not have any significant impact on the national industry.         "The bombing and shootout at the Sarinah Department Store and Starbucks coffee shop in Thamrin Boulevard will not significantly affect the development of industry at the national level. We regret the incident but hopefully it will not affect the national industry," Industry Minister Saleh Husin said on Friday.          However, he admitted that the bombings and shootouts would disturb trade circles to some extent but that would only be temporary in nature.          The Indonesian Chamber of Commerce and Industry's Jakarta Office (Kadin Jakarta) also admitted that it impacted business and economic activities in Jakarta, but did not have any widespread impact on economic activities at the national level.          "Psychologically, the terror attacks disturbed the market as reflected in the weakening of the rupiah's exchange rate against the US dollar. It almost reached Rp14,000 per US dollar," Kadin Jakarta Deputy Chairman Sarman Simanjorang said in a press statement on Friday.

GOVT URGED TO PREPARE SHIPBUILDING INDUSTRIES

By Andi Abdussalam

Jakarta, July 28 (Antara) - While focussing its development on the maritime sector, the Indonesian government is being urged to prepare the country's shipbuilding industries so that they can meet the need for ships at home.          Shipbuilding industrires are expected to support the government's maritime axis and sea toll programs. The sea toll program can be successful only if the number of ships is adequate to meet the need for transportation.          After all the government is banning local industries from purchasing ships abroad in its attempt to advance local ship manufacturing companies.          Indonesia's share in the global market is still relatively small, which according to the Capital Investment Coordinating Board (BKPM) is only about 0.3 percent.          This is smaller compared to the 2.6 percent share of the Philippines and 1.1 percent of Vietnam. China is a major ship exporter with a global market share of 41 percent, while South Korea's share is 33 percent, and Japan's is 18 percent.

COMPETITIVENESS OF INDONESIA'S PRODUCTS TO WEAKEN IN WAKE OF POWER TARIFF HIKES

By Andi Abdussalam

Jakarta, April 28 (Antara) - The basic electricity tariff hike may increase production costs, particularly of domestic textile products by about 15 percent, thus weakening their competitiveness in the face of next year's ASEAN Economic Community (AEC).          "The production cost of both up and downstream textile products is expected to rise by 15 percent when the basic electricity tariffs increase in May," General Chairman of the Indonesian Textile Producers Association (API) Ade Sudradjat said.          Textile industries have predicted that the competitive edge of Indonesia's textile products will therefore be weakened in the face of the ASEAN Economic Community, which will begin next year.          "The increase in the basic power rate (TDL) beginning on May 1, 2014, will affect production costs. I am afraid it will disturb the performance of industries, particularly that of big industries, amid preparations to enter the AEC," Industry Minister MS Hidayat said on Monday.          Electricity tariffs for large-scale industries will increase in the range of 8.6-13.3 percent every two months as of May 1. The increase is based on the results of a discussion with the House of Representatives and the Energy and Mineral Resources Ministry.          The government will no longer subsidize the electricity tariffs for large-scale industries as of November 1.

INDONESIA DETERMINED TO EMERGE AS NEW ASIAN TIGER

By Andi Abdussalam
Jakarta, April 20 (Antara) - Indonesia is now putting in place industrial development programs across the country in an effort to create a new economic growth momentum and emerge as a new Asian economic tiger.          "I am very much convinced that the current 21st century will be the best century for Indonesia, as the country is destined to emerge as an Asian giant," former Indonesian ambassador to the United States Dino Patt Djalal, who is now taking part in the ruling Democratic Party presidential candidate convection, said in Mataram, West Nusa Tenggara, on Wednesday last week.          As part of the development, the Ministry of Industry is encouraging the acceleration and equitable distribution of locating industries throughout the country.          "We hope we can continue to develop industries throughout the country to increase their added values, particularly industries outside Java," Industry Deputy Minister Alex SW Retraubun said in press statement made available to Antara here on Wednesday.

RI AIMS TO BECOME BASE FOR ASEAN TIMBER INDUSTRY

By Andi Abdussalam
Jakarta, Jan 27 (Antara) - By promoting the trade of certified timber through its timber legality verification system (SVLK) and the use of raw materials from plantation forests or timber estates, Indonesia hopes to become an ASEAN timber production base.          In addition, Indonesia is also determined to regain its share of the timber market in Europe, since it has the opportunity to become the first country to export timber products with the "Forest Law Enforcement Governance and Trade" (FLEGT) certification.          "We have a comparative advantage in the timber industry. Therefore, it is possible for Indonesia to become a production base," Chief Economic Minister Hatta Rajasa said when inspecting the facilities of a timber estate company, PT Pundi Uniwood Industry, along with Forestry Minister Zulkifli Hasan in the Serang district, Banten, last week.          The Indonesian government hopes to encourage the development of the timber industry through the partnership model. That is expected to help Indonesia's timber industry face competition from the ASEAN Economic Community next year.

BUSINESSES WORRY ABOUT POWER RATE HIKES

By Andi Abdussalam

Jakarta, Dec 29 (ANTARA) - Businessmen and industrialists have expressed concern about the government's plan to increase the electricity tariff by about 15 percent in 2013, saying it would hamper business development and slow the nation's economic and industrial growth.       Coupled with the planned increase in the minimum wage, the power rate increase will raise businesses production costs to about 43 percent.  This will drive up the prices of locally produced goods and reduce their competitiveness, prompting the country to be flooded with imported commodities, businessmen warned.       Further, the power tariff hikes would prevent the government from reaching its economic target of 6.8 percent growth in 2013. With high production costs, industry would also face difficulties in achieving its growth target of 7.1 percent next year.         "At present, we are pessimistic about Indonesia's economic growth. I think it would be good if the country's economy could grow by six percent," Sofyan Wanandi, the chairman of the Indonesian Businessmen Association (Apindo), said here over the weekend.

RI'S MANUFACTURING INDUSTRY GROWING AT ROBUST PACE

By Andi Abdussalam

Jakarta, Aug 14 (ANTARA) - Even as concerns about Indonesia's trade imbalance mount, given the increase in capital goods and raw material imports, the country's manufacturing industry is currently experiencing momentous growth, which is expected to restore the trade balance through a swell in exports of manufactured goods.          With the current robust growth of its manufacturing industry, Indonesia has become increasingly attractive to foreign investors who expect Asia, including Indonesia, to recover the fastest from the global economic meltdown.           After registering a slow growth rate in the 2005 to 2009 period, the manufacturing industrial sector has rebounded considerably. In 2011, the non-oil and gas processing industrial sector grew by 6.83 percent, which was higher than the national average of 6.46 percent.          "2011¿s growth rate was the highest the sector has seen in the past five years," Industry Minister M.S. Hidayat said on Monday.         The industrial sub-sectors of transportation equipment and machinery have also seen immense growth, he added.         "Transportation equipment and machinery industries rose by 8.98 percent, the food, beverage and tobacco industries were up 7.03 percent and the cement and non-metal quarrying goods industry jumped 6.92 percent," Hidayat added.         However the robust growth has been leveled by the expansion of industries, which import capital goods and raw materials for manufacturing purposes, thereby causing a deficit in the country¿s trade balance.          The monetary, statistics and balance of payment Director of Bank Indonesia (BI) Doddy Zulverdi pointed out that Indonesia's current account deficit for the second quarter of 2012 has reached US $6.9 billion, or about 3.1 percent of its Gross Domestic Product (GDP).         "A 3.1 percent current account deficit is still below the unfavorable psychological level. But even though it hasn't touched that critical level yet, it needs to be monitored as it can negatively impact the real estate and banking sectors," Zulverdis said.          Chief Economic Minister Hatta Rajasa pointed out that imports of capital goods have soared given the rising demand from companies, which include airplane and spare parts firms whose imports have jumped 73.7 percent, motor vehicles and spare part businesses whose imports rose 45.3 percent, imports were up 43.3 percent for iron and steel products companies and increased 25.4 percent for companies that sell mechanical appliances.         "An increase in raw material imports can further hurt the balance in trade, if necessary steps are not taken to control them," Rajasa said, adding that the government also needs to improve domestic consumption and government spending in the investment sector.         Rajasa added that he also sees the trend of high imports as temporary in nature, because the Indonesian economy currently needs these capital goods and raw materials for boosting production in its manufacturing sector.         After all, a rapid growth of the manufacturing industry is bound to attract more foreign investors, he added.         "The manufacturing industry is one of the most favored sectors by foreign investors in line with the expected recovery of international trade. This global recovery will benefit Indonesia if it improves its economic conditions," Suryo Bambang, chairman of the Indonesian Chamber of Commerce and Industry (Kadin) said.         He added that potential market possibilities offered by Indonesia's large population and workforce as raw materials are also among factors that have attracted foreign investors. "Foreign investors want to do business in Vietnam, but because of the country¿s banking constraints, they relocate their investment to Indonesia," Bambang said.         He said that Indonesia's banking system is one of the factors that attract investors. "Other positive aspects include political stability, security and the country's free market mechanisms."    For instance, the Ministry of Industry expects US investment in Indonesia to reach US $5 billion by 2014. ¿The United States' investment in Indonesia has touched US $2 billion after the signing of a cooperation agreement between the Celanese Corporation and state-owned oil and gas firm PT Pertamina,¿ Industry Minister M.S. Hidayat said.        The government is also trying to boost its textile industry and for that purpose the Indonesian Ministry of Trade has tied up with the South Korea International Cooperation Agency.        "We need a total budget of US $1.6 million to implement this technical cooperation plan," Sungho Choi, the resident representative of the South Korea International Cooperation Agency said during the signing of the cooperation agreement at Hidayat's office in Jakarta earlier this month.         Noting the rapid growth of the industrial sector in Indonesia, domestic investors who are part of the Indonesian Businessmen Association (Apindo), said they are convinced that the government will be able to achieve its growth target of 7.1 percent for 2012.         "Industrial growth can touch 7.1 percent if the government remains focused on industrial development in the downstream areas, such as distribution, marketing, etc. The national industrial growth will also attract more investors," Apindo chairman Erwin Aksa said.         He however, pointed out that investors still face constraints during industrial development, which include high bank lending rates and shortage of infrastructure.         "Bank interest rates in Indonesia are relatively higher than those in other ASEAN countries. In addition, poor port facilities and the lack of other infrastructure still hamper industrial growth in Indonesia," Aksa said.         Aksa added that the current law governing land procurement, which is still being deliberated upon by the House of Representatives (DPR), and gas supplies are also a problem. "If the gas supplies are not normalized by the government, it will discourage investors," he said.          Despite these constraints, Hidayat said he is optimistic about the government achieving the 7.1 percent growth rate target for 2012.         He added that he also expects the Indonesian economy to realize its full potential and maintain industrial growth following an improvement in the economic prospects of United States and Japan in 2012.         Indonesian growth will also be fueled by the huge domestic market, which is made up of its 134 million-strong middle class population, Hidayat said. ***2*** (T.A014/INE/KR-BSR/F001) 14-08-2012 15:34:5

INDUSTRIES COMPLAIN OF GAS SUPPLY, PLANNED PRICE INCREASE

By Andi Abdussalam

Jakarta, May 18 (ANTARA) - Industries have so far complained of a gas supply shortage at their factories, and now they are complaining about the government's plan to increase the price of gas, which will increase their operating costs.          The government is unable to meet the industrial sector's gas needs as it prioritises demand from the export market, said the chief of the Indonesian Chamber of Commerce and Industry (Kadin) Suryo Bambang Sulisto.          "The policy to export gas is wrong," he remarked recently. The government has taken the wrong step by exporting a large quantity of gas, he observed, adding that the policy will weaken the domestic industry.          According to Suryo, the lack of gas supplies to the national industries has made them unable to compete with foreign rivals.          "Gas supplies often fluctuate. Sometimes they increase, but at times they decrease and even stop. As a result, many companies turn to coal, which is costly and is not environment-friendly," he explained.          "It is impossible for the government to import gas because it is costly," he added.           Indonesia's gas lifting is estimated at 1,300 million barrels equivalent to oil per day (mboepd). According to Finance Minister Agus Martowardojo, the government has set a gas lifting target of 1,290-1,360 mboepd for next year's budget.          "For accountability and in order that the public know it, we will include the figure of gas lifting (in the state budget) from year to year, which will become part of the budget macro assumption," the minister stated.          In an effort to meet the domestic industry's gas requirements, the Indonesian government will review its gas sales contract with Japan in order to meet these requirements, particularly those of the industrial sector.           "We continue to respect the existing contract with Japan. Only after the contract expires will the government assess domestic gas supplies," remarked Industry Minister MS Hidayat in the meantime.           He confirmed that the government will prioritise gas supplies to the domestic industry.          "The government wants the demand for gas from the manufacturing sector fulfilled. Only if there is surplus gas can we export it to Japan," he pointed out.          According to the minister, gas supplies are one reason that investors are concerned about investing in the country.          "South Korean tyre manufacturer PT Hankook Tire Co Ltd plans to invest around US$1.1 billion in Indonesia until 2018, but the gas supplies to the company still fall short of its needs," he said.          Besides of the lack of gas supplies, industries have also complained of the government's plan to increase gas prices for industries. The state-owned gas distributor firm PGN has decided to increase the price of gas for industries by 55 percent from US$6.7 to US$10.2 per million British thermal units (mmbtu) beginning May 1, 2012, said the PGN secretary.           PGN Corporate Secretary Heri Yusup said that PGN had taken this decision because its price of purchasing from gas contractors had also increased since April 1, 2012.          In the meantime, state-owned power firm PLN also expressed its objection to the planned gas price increase of 55 percent - from US$6.7 to US$10.2 per mmbtu.          The head of the PLN fuel and gas affairs division Suryadi Mardjoeki declared that his company would ask for a special gas price, different from that for other industries. "Electricity is somewhat different from other industries," he asserted.          Industries, through their various associations, have filed complaints with the government and threaten to go on strike to protest against the planned gas price hike.         The leaders of the Association of Indonesian Food and Beverage Producers (Gapmi) and the Association of Ceramic Industries (Asaki) announced on Thursday that they would write to the government to protest the decision by PGN, adding that they would prefer it if the price increase were implemented in stages.         According to Heri Yusup, however, the planned gas price hike was still in the process of being made public. "We are still in the process of popularising the plan to increase gas prices for industries. We will make our evaluation based on inputs from the public," he remarked.         Meanwhile, Asaki chief Achmad Widjaya complained about the PGN's decision to increase the gas price when it was already unable to meet its quota of gas supplies. "It is strange. They raise the price, but the service remains poor. This is what has made industries send a strong message of protest to the government," he noted.         Heri of PGN pointed out that a number of associations and industry consumers had agreed to the plan to increase the price, on condition that gas supply would not decline or even increase.         He explained that the contractors who had increased the price of gas that they sold to PGN had promised to increase supplies.          According to Heri, the volume of gas supply from gas contractors has already begun to increase, with an average distribution of 800 million metric standard cubic feet per day (mmscfd).          The same view was expressed by Industry Minister MS Hidayat, who maintained that industries would actually agree to the price increase as long as they were guaranteed gas supply.          "Actually, industries will accept economically feasible prices. What becomes a problem is when the price rises but the supply declines, which obstructs production," Hidayat remarked.***2*** (T.A014/a/INE/a014/KR-BSR/A/A014) 18-05-2012 18:38

INDUSTRY MUST BRACE FOR FUEL OIL PRICE HIKES

Andi Abdussalam

Jakarta, March 24 (ANTARA) - Industries must brace themselves to face subsidized fuel price hikes of about 33 percent next month, despite predictions they will not be largely affected.          "Industries, particularly the food and beverage industries, are challenged by the increase caused by the fuel oil price hikes. While consumers' purchasing power will weaken, industries will also face increasing transportation costs," Benny Wahyudi, director general for agro-industry affairs, said over the weekend.          The director general predicted that the growth of the food and beverage industries will slow this year from 9.19 percent in 2011 to 8.15 percent.          But his colleague Dedi Mulyadi, who is director general for regional industry development affairs, said that, overall, fuel oil price hikes will not largely affect Indonesia¿s industries.          He explained that even if the government raises fuel oil prices and electricity tariffs, it would not have much effect on industries in the country. "If the government raises fuel oil price by Rp1,500 per liter and the electricity tariff by 10 percent, simultaneously, it will cut output in the  industrial sector, but its percentage will only be small, just about -0.26 percent," Dedi Mulyadi said.          Though this week, rallies opposing the government's plan to raise fuel oil prices continue across the country. Demonstrators claimed the policy would cause commodity prices to increase and burden the public.          The government is planning to raise the price of subsidized fuel oil on April 1 and has submitted two options to the House of Representatives (DPR). In the first proposal, the government seeks to raise the price of subsidized premium gasoline from Rp4,500 to Rp6,000 per liter, and diesel oil from Rp4,500 to Rp6,000 per liter.         Industrialists in the food and beverage sectors concurred with Director General Dedi Mulyadi's view, saying fuel price hikes will not seriously affect them.         "The increase in fuel prices will not affect industries too much, possibly only about three percent on distribution, because industries have used international price standards since November 2011," Secretary General of Food and Beverages Businesses Association Franky Sibarani said.            Further, the fuel oil price increase is expected to only affect the transportation sector of the industries, or distribution costs, he said.  Sibarani noted that the increase in the prices of food and drink could not be caused by only one factor, but there must be a number of events that contribute to such increases.           "If increases happen, it would not be because of fuel oil price increases, but due to the increase in packaging prices as a result of the hike in the world crude price or of the increase of sugar prices and other factors," he added.         Director general Dedi Mulyadi pointed out that his analysis was based on a computable general equilibrium (CGE) comparative static analysis developed by the University of Gajah Mada.         "It is simulated in the analysis that fuel oil prices increase 33 and 44 percent, or Rp1,500 and Rp2,000 per liter, while electricity increases to 10 percent," Dedi said.          Based on the analysis, the largest impact will be suffered by metal and steel industries, by -1.3 percent if fuel prices rise to 33 percent and the electricity tariff to 10 percent. Additionally, the impact will be -1.39 percent if fuel oil prices rise to 44 percent and electricity tariff increases to 10 percent.          An increase of fuel oil prices by 33 percent and the electricity tariff by 10 percent is expected to reduce the real gross national product (GNP) by -0.163 percent due to the predicted drop in household consumption by -0.160 percent, exports by -0.221 percent and investment by -0.160 percent.          The ministry of industry's analysis also concluded that an increase of fuel oil prices by 33 percent or 44 percent will have a direct impact on the increase in the transportation costs, seeing an increase of 19.6 percent or 23.8 percent.          Therefore, in order to assist domestic industries in overcoming the impact of the fuel oil price hikes, the public¿s consumption needs to be directed to the purchase of locally made products to boost the nation's economic development.          "Our annual consumption expenditures amount to Rp4 thousand trillion, of which 56 percent are contributed by the local currency rupiah," Fauzi Azis, an expert in marketing and domestic consumption promotion affairs of the ministry of industry, said at a press conference during the launch of  "Made in Indonesia Expo 2012" last week.          The data indicates the large potential the Indonesian people have on product consumption. "Thus, it is very important to promote domestic products to local consumers, including food and beverage products," Fauzi said.          Further, the growth of the food and beverage industries is predicted to slow this year. According to Agro-Industry Director General Benny Wahyudi, his ministry's long-term plan has set a growth target of 8.15 percent in the food and beverage sectors.          "We have to set the target at a minimum growth of 8.15 percent," he pointed out.***2*** (T.A014/INE A/O001) 24-03-2012 14:31:

GROWTH OF INDUSTRIAL PRODUCTIN ENCOURAGING

By Andi Abdussalam

Jakarta, Aug 2 (ANTARA)  - Although industries at home still depend on imported raw materials, yet  their products are showing encouraging growth as reflected in their domination of the country's non oil / non gas commodity exports.          Besides, production of medium and large scale industries also showed an increase of 4.79 percent while that of small and medium manufacturing industries also increased by 1.4 percent.          Thus, dependence on raw materials could be compensated with increased exports. "The increase in the exports of industrial products by 36.74 percent in the January - June 2011 period is likely due to the increase in the raw materials / auxiliary goods imports in the previous periods," Central Board of Statistics (BPS) Head Rusman Heriawan said on Monday.          In the first semester of 2011, industrial product exports accounted for 27.5 percent of the total non oil /no gas product exports which during that period showed an increase of 33.2 percent.          According to Rusman the increase in the industrial exports could have been boosted by the importation of raw materials or auxiliary goods for industry at home. It seems that Indonesia's dependence on imported raw materials is still high.          Rusman Heriawan said that in the first semester of this year imports of raw materials / auxiliary goods were recorded at 62.88 bullion US dollars, accounting for 75.23 percent of the country's whole import values in the same period.          He said that if compared with the imports of the same commodities in the corresponding period a year earlier which were recorded at 73.45 percent of the whole imports, the percentage of imported raw materials / auxiliary goods this year were higher.       Yet, there is an indication that the increase in the importation of raw materials / supporting goods had links with the increase in the country's exports of industrial products in the following period.          Vice Minister for trade affairs Mahendra Siregar said in the January - June 2011 period the industrial sector products dominated the non oil / non gas exports. He said that industrial products contributed 27.5 percent to the non oil / non gas exports which in the same period increased by 33.2 percent.          He said that the contribution of the industrial sector was far higher than those of two other sectors, namely mining and agriculture. The two sectors contributed 5.1 percent and 0.7 percent respectively.           During the first semester of 2001, the exports of industrial products increased 36.7 percent from US$44.4 billion to US$60.7 billion. The increase was supported by increase in the exports of manufacturing industrial products such as textile and textile products.          Trade Minister Mari Elka Pangestu said the domination of industrial products in the non oil / non gas exports in the first half of the year indicated that the development of down stream industry in the country was already on the right track.          According to the BPS,  small and medium manufacturing industrial products in the second quarter of this year increased by 1.48 percent from that in the previous month.          "But we cannot compare it with that in the same period a year earlier because our survey only began in the fourth quarter in 2010,"  BPS chief Rusman Heriawan.          Based on the BPS data, the highest production growth in the small and medium manufacturing industries in the second quarter was experienced by such sectors as papers and paper-based products (11.35 percent),  motor vehicle industry, trailer and semi-trailer (10.12 percent and chemicals or chemical-based products (9.92 percent).          Rusman said that furniture, non-metal quarrying goods and food sectors contributed a lot to the growth of small and medium manufacturing industries . their respective contribution was recorded at 12.51 percent, 12.39 percent and 12.32 percent.          Yet, the BPS also recorded a production decline in a number of small and medium manufacturing industries such as timber, wood-based industry, rattan-based and bamboo-based industries; repair services, tool and machinery assembling; and non-metal quarrying industry. The three sectors respectively declined by 5.83 percent, 4.10 percent and 2.88 percent.          Besides, small and medium manufacturing industries, the statistics agency also recorded production increases in the large and medium scale industries, which experienced a 4.79 percent growth in the second quarter of 2011.          "In the past three years the growth of large and medium scale industries had always increased in the second quarters," Rusman Heriawan said.          He said that large scale manufacturing industries in the second quarter of 2010 rose by 4.3 percent from the second quarter of 2009 while in 2009 it rose by 064 percent from that in the previous year.         The BPS data indicated that increase in production took place in May and June. Large and medium scale manufacturing industrial products in May increased 2.23 percent from the previous month and in June it rose by 1.62 percent from a month earlier.          The highest increase happened with the electricity machinery industry, basic metal, chemical and chemical-based goods as well as leather and leather-based goods.          The production of industrial products such as rubber, rubber-based goods, plastics and plastic-based products, wood and wood-based commodities, experienced a decline.***5*** (T.A014/A/H-NG/H-YH) 02-08-2011 21:59:3

NATIONAL STEEL INDUSTRY FACING GLOOMY

By Andi Abdussalam

Jakarta, Feb 20 (ANTARA) - The global economic crisis has begun impacting Indonesia's iron business with the steel industry now making every possible effort to shore up sales amid excessive stocks, a gloomy world market and declining domestic demand.         In the face of this condition, the Indonesian Iron and Steel Industry Association (IISIA) has called on the government to take swift actions to save the national steel industry from bankruptcy.         "I think, the government should take the necessary steps immediately to save the steel industry from bankruptcy," IISIA chairman Fazwar Bujang told a hearing with the House's Industry Commission recently.         The director of metal industry of the ministry of industry, I.G. Putu Suryawirawan said on Thursday that Indonesia's domestic steel industry was holding an excess production stock of 2.5 million tons due to declining exports and domestic demand as a result of the current global economic crisis.         According to Taufiqurrahman Ruki, chief commissioner of state-owned steel producer PT Krakatau Steel, the drop in the steel sales this year is among others caused by small absorption from the domestic market and decreasing exports as a result of weakening global and regional economy as well as limited liquidity in the financial sector.         Other factors contributing to the decline of the company's sales were rising interest, weakening capital market and rupiah exchange rate against the US dollar and rising inflation, he said.         With declining exports and domestic demand, steel stocks at home are increasing.         "The IISIA said it had around 2.5 million tons in excess stocks of long and flat products of various sizes. That was the position unveiled yesterday during a meeting with the trade minister,", Putu Suryawirawan said on Thursday.         This condition is dangerous with regard to the continuation of domestic steel industry because the excess stock comprised almost half of the national production which is about 5.5 to 6.5 million tons per annum.         The national steel production in 2006 stood at 5.3 million tons, and 6.5 million tons in 2007. Since September 2008, the production began to decline, so that in 2008 production will be not be different from that in 2007.         The installed capacity of around 100 national steel plants reaches six million tons while its utilization, in normal conditions, reaches four million tons a year.         In the past four years, steel imports tended to increase in line with rising domestic demand for the commodity. In 2008, it was estimated that Indonesia's total steel imports reached 1.5 million tons while domestic need for steel was estimated at 6 million tons per annum.         According to Bujang, who is also president director of state-owned steel producer PT Krakatau Steel, the utilization of steel industry has declined from 80 percent in early 2008 to abut 20 to 40 percent, however.         Last year the price of steel continued to increase from first to third quarter making the price of pellets, pig iron, scarp and semi-finished products such as sponge, slab and fillet to rise and simultaneously followed by an increase in the buying price of raw materials for steel industry.         "Entering the fourth quarter of 2008 the price dropped sharply as a result of oil price slump and global financial crisis triggering reduction in steel demand and the weakening of consumers' purchasing power," he said.         In an effort to overcome the problems facing national steel industry, Fazwar Bujang asked the government to raise steel import duty by 20 to 30 percent, channeling a pledged fiscal stimulus and making an inventory of steel importers in the country.         "Steel producers will not object to the import of special steel, because not all steel could be produced in Indonesia particularly that for automotive. But we also asked the government not to import steel products which can be produced domestically," Bujang said.         In the meantime, the House of Representatives (DPR)'s Commission XI on financial affairs called on the government to raise steel import duty in an effort to protect the domestic steel industry.         "It is the obligation of the government to protect steel industry at home from imported steel products and prevent massive layoffs. Imported steel products have now posed a big problem in the domestic market," Commission XI chairman Hafiz Zanawi said last week.         Zanawi said that steel industry at home could not survive only with stimulus in the form of income tax cuts. Increase import duty would be more effective, he said.         About the conditions of PT Krakatau Steel (KS), economist of the Gajah Mada University, Ichsanudin Noorsy, recently suggested that the government should order other state-owned enterprises in need of steel products to purchase the commodity from KS.         "KS can call PT PAL and sell its steel to the state shipbuilding firm. It can also call state-owned railway firm PT KAI to build railway tracks in Sumatra and Java," he said.         After all, PT PAL, which is now building two ships ordered by Germany is expected to build 16 other ships until 1012. Virtually, PT KS will supply 14,000 tons of steel to PT PAL for the construction of two ships being ordered by Germany.         According to I.G. Putu Suryawirawan, the government is pushing domestic demand by requiring use of local products in all government projects. He said imports would be also monitored to avoid excess.         "There must not be too many products coming from outside the country meaning that price dumping must never happen here. In short illegal imports and dumping must be prevented," he said.         He said the industry ministry was now still listing local products that had to be used in government projects. "We are still making the list. There are many kinds of products in the metal sector including aluminum and steel. Identification of government projects that could increase their absorption of domestic products is now also still being carried out," he said. ***2*** (T.A014/A/HAJM/17:35/a014) (T.A014/A/A014/A/A014) 20-02-2009 17:39:50

GLOOMY OUTLOOK OVERSHADOWS INDUSTRY IN 2009

By Andi Abdussalam

Jakarta, Dec 23 (ANTARA) - The growth of the industrial sector, like other sectors in Indonesia, will slow down amid the global economic crisis in 2009, with the manufacturing industry likely to be affected most.

        The ministry of Industry has predicted that the economic meltdown will badly hit non-oil/gas sectors. But it could not yet provide an exact estimate on the slowing down of the industrial growth in the country in 2009.

        "In the wake of the global economic crisis, we could not courageously provide an exact estimate yet on industrial growth next year. We could only give an estimate of 3.6 percent. If an optimistic figure is expected, we could put it at 4.6 percent," Secretary General of the Industry Ministry Agus Tjahajana said here on Tuesday.

        Hope has been pinned on the manufacturing sector. This sector is expected to contribute significantly to the industrial growth. In the manufacturing sector,a moderate growth at 7.7 percent, or optimistic one at 8.7 percent is expected to come from the transportation equipment industry, machinery and tools. Yet this sector is predicted to suffer a lot from the economic crunch next year.

        Finance Minister Sri Mulyani Indrawati said that the most affected sector next year by the current global economic crisis would be the manufacturing industry.

        "Industry which is predicted to suffer from the most negative impact of the global economic meltdown is the manufacturing sector," the minister said here on Tuesday.

        In the face of the bad conditions the government provides help for industries in order that they would be able to cut their production costs, particularly to prevent workers' layoffs.

        "The government has been doing this. It is trying to reduce industrial costs by, for example, lowering fuel oil prices. We hope that the move would reduce the cost structure of companies," she said.

        The gloomy economic outlook next year is also predicted to overshadow other industrial sectors such as the textile and textile product industry.

        Director General of Textile, Machinery, Metal and Multifarious Industries Ansari Bukhari said the growth of the textile and textile product industry would slow down in 2009.

        "The growth of textile and textile product industry will drop by about 10 to 20 percent," the director general said.

        The same thing will also happen to the steel industry. Most of steel producers will reduce their production. Owing to this fact, the drop in the steel industrial growth is estimated at 30 to 40 percent.

        "But we hope that this condition would not continue to prevail throughout 2009. So far the steel industry in the country has been facing raw materials problems. They purchased expensive raw materials for two or three month stocks. If this problem is overcome, I think their products would be able to compete again with those from other countries," he said.

        Bad conditions are also to be experienced by agro and chemical industries because it is predicted that investment in this sector will also fall as what has happened in 2008.

        Foreign investment in this sector was reduced by almost 50 percent in 2008 from Rp3.3 trillion in 2007 to Rp1.6 trillion this year.

        In the meantime, Director General for Telematics and Transportation Equipment Industry, Budi Dharmadi, expressed optimism for a possible growth in this sector. His optimism is based on the 2006 experience when automotive sales dropped but the industry was still able to grow by about seven percent.

        He said that his office would reinforce two aspects in the face of the global economic crisis next year, namely the financial and commercial aspects. Several principals of automotive and electronic companies are providing assistance in order to reduce distribution costs from the factories to the dealers.

        The optimism is also based on the government's policy to provide incentives, among others in the form of government-borne import duties, government-borne value added tax and deferred income tax.

        "I think there will shortly be companies which will enjoy income tax incentives," the director general said.

        In the automotive sector, according to Budi Dharmadi, the biggest growth contribution will come from cars, namely about 2.8 percent, electronics (2.13 percent) and motorcycles (1.7 percent.

        In the meantime, the property sector will also face a sluggish growth. According to property sector observer Panangian Simanungkalit, the industry's capitalization or sales value in 2009 was predicted to drop to Rp70 trillion.

        Simanungkalit, who is also director of the Indonesian Center for Property Studies, said in 2007 the industry's capitalization reached Rp83 trillion and it was predicted to reach Rp83 trillion in 2008.

        Rising interest rates and oversupplies are the causes of the drop in capitalization. "Because the reference rate remains high, banks have increased their credit interest rates, so that developers have put a brake on expansions," he said.

        He said properties priced below Rp500 million per unit would still grow. Their market was still wide and their prices were relatively low, he said. However, it would be difficult for properties priced above Rp1 billion per unit to grow because they were already in oversupply, he said. (A014/A/HNG/A/S012) 23-12-2008 22:06:59