Jakarta, Feb 16 (Antara) - The Indonesian Rubber Producers Association (Gapkindo) wants the government to strengthen the country's rubber industry by opening the downstream rather than the upstream sector to foreign investors.
Gapkindo chairman Moenardji Soedargo said his association would welcome it if the government opens the door to foreign investors in the downstream rubber business to reinforce the integral structure of the rubber industry in the country.
However, the rubber industry in the upstream sector, such as crumb rubber business, should allow only the national or domestic industry players, with the number of existing factories in the country now reaching 140.
As of now, the existing rubber factories in the upstream areas were unable to operate to their full capacity and could not absorb workers optimally. "In such conditions, offering new investment (in the upstream sector to foreign investors) will kill the existing industry," Moenardji Soedargo said in Jakarta on Monday.
In order to make national businesses more competitive, Gapkindo said it hopes that the government will improve the funding/baking cost structure so that domestic rubber businesses can compete with foreign companies.
"Apart from the funding cost aspect, members of the Gapkindo, in general, already have a competitive edge," noted Soedargo.
Gapkindo, he said, is of the view that the government should boost natural rubber outputs and productivity in the upstream sector in an effort to narrow the gap between the output level and the designed production capacity of crumb rubber factories. This could increase national efficiency and competitiveness.
Therefore, the removal of crumb rubber business from the Investment Negative List (DNI) for foreign investors is not considered an effective solution.
The government revised the DNI's remit by removing 35 economic sectors, opening these to 100 percent foreign investment. These sectors included crumb rubber; cold storage; tourism businesses such as restaurants, cocktail lounges, cafés, recreation centers, arts and entertainment; sports centers; and film industry.
"The revision of the DNI which now offers investment opportunities in the crumb rubber industry (to foreign investors) is not a correct solution. We consider that the establishment of new factories in the crumb rubber sector should be stopped," said Soedargo.
He said Gapkindo was of the view that the removal of the crumb rubber business from the DNI through the issuance of the government's tenth economic policy package is not relevant to the current condition.
Removing the crumb rubber sector from the negative list, if intended to enhance the number of jobs, was not an effective means because the existing crumb rubber factories could not yet operate at full capacity in any case.
"The existing crumb rubber factories could not yet operate at full capacity and, therefore, could not provide optimal jobs. Thus, if the aim is to offer enhanced job opportunities, the DNI revision is not relevant," Soedargo stated.
He said that crumb rubber industry does not need high technology from overseas or from foreign investors because it could be developed by national businesses.
Chairman of the Indonesian Rubber Business Council, Aziz Pane said the removal of the crumb rubber sector from the DNI will allow foreign investors to invest freely and establish new factories or acquire existing ones.
Pane said this can lead to the establishment of a regional oligopoly market where the price of farmer's rubber will be determined by big oligopolistic companies.
The regional oligopolistic market will damage the cause of good cooperation between the local industry and farmers and will result in farmers suffering losses. There are fears that it could lead farmers to shift from rubber plants to other types of more promising plants.
"Already, many farmers have cut down their rubber trees because rubber prices no longer hold the promise of benefit. For Indonesia, the situation is dangerous as the country is known as a world rubber producer country," Pane said.
Earlier, Chief Economic Minister Darmin Nasution said the government intended to protect small businesses from foreign ownership although it had revised the DNI.
"Foreign investment is needed to move the wheel of the economy while the interest of small businesses should continue to be protected," the Coordinating Minister for Economic Affairs said on Sunday (Feb. 14).
Although the government has opened several business fields for foreign investors, yet business sectors which need a capital of less than Rp10 billion with small risks and using modest technology, will not be opened for foreign investment, Darmin explained.
He said the tenth economic package has the aim of ending the control by certain groups of certain economic fields and of protecting micro, small, medium-sized entrepreneurs (SMEs) and cooperatives.
"Besides enhancing employment opportunities and strengthening working capital, the policy is also intended to develop national companies so that they would be able to compete and become strong in the domestic and global markets," Darmin noted.
On the list, the government regulates a business partnership aimed at encouraging domestic and foreign companies to cooperate with SMEs in expanded 62 economic fields from previously 48 sectors to 110 sectors.
The head of the Capital Investment Coordinating Board (BKPM), Franky Sibarani said, meanwhile, that the announcement of the new DNI in the current first quarter of the year will have a positive impact on the government's efforts to realize its investment target of Rp594.8 trillion in 2016.
"The revision of the DNI offers certainty to business players, both domestic and foreign investors," Franky pointed out.
Through the package, it increased the number of reserved business areas for SMEs and cooperatives by 19 additional business sectors. The new arrangement has been made following the revision of Presidential Decree (Perpres) No. 39 of 2014 on the List of Business Fields Closed and Business Fields Open with Conditions to Investment in the investment sector (DNI). ***3***(A014/INE/B003)EDITED BY INE(T.A014/A/BESSR/Bustanuddin) 16-02-2016 19:45:5 |
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