The government is forecasting that the manufacturing sector will grow by 4.55 percent in 2010, in line with the recovery of the domestic and global economies, a senior cabinet minister said on Monday.
Although still modest, that represents a significant improvement over last year, when the sector is estimated to have grown by just 1.6 percent.
“We have a strong industrial base with a big opportunity to develop it. There are several things to be done and coordinated among industrial elements such as industry players, government and financial institutions,” Coordinating Minister for the Economy Hatta Rajasa said at a news conference in Jakarta.
“But I believe this year we will be able to solve the problem and achieve the growth target.”
Minister of Industry MS Hidayat said he is optimistic that this year’s growth target will be met, although some analysts fear that the implementation of the China-Asean Free Trade Agreement may limit the growth of the manufacturing sector because of an inflow of cheaper Chinese goods.
Hidayat noted that some other industries that shrank last year, such as manufacturing equipment and steel and iron, should move back into positive growth during the course of the upcoming year.
“The fact that we survived the impact of the global financial crisis has opened the opportunity to attract more investors, both local and foreign. We have the materials, equipment, skill and qualified people to be an industrial base,” he said.
The government, he continued, has a clear development program to boost manufacturing growth that is expected to be completed this year. The program includes revitalizing machinery and restructuring industries that were affected by the global crisis.
“This program will renew our machinery to produce good quality products and compete with exported ones," Hidayat said.
Government intervention aside, Indonesian industry is also becoming more innovative.
“There are many businessmen who have developed alternative energy sources to save costs,” said Hidayat, adding that the government had provided facilities to support them.
“In 2009, the industrial sector has successfully created job opportunities,” he added.
Data released by the Coordinating Ministry for the Economy on Monday revealed that in 2009 the number of people who worked in the manufacturing sector was around 14 million, which is an increase of 570,000 people over 2008.
The four sectors projected to have achieve growth of above 1 percent this year include food, beverages and tobacco, which is projected to grow b y 6.61 percent compared with 13.31 percent last year. The fertilizer, chemicals and rubber sector is expected to grow by 4.9 percent compared with 1.15 percent last year. The pulp and paper sector is expected to rise by 2.58 percent compared with 4.53 percent last year.
And textiles, footwear and leather is expected to grow by 1.45 percent after contracting by 0.6 percent last year.