Cable makers urged to improve quality<\/p>\n
JAKARTA (JP): The Indonesian Electric Cable Manufacturers
\nAssociation (APKABEL) believes upgrading quality of local cables
\nis the only choice in ending the dominance of imported cables in
\nthe domestic market.<\/p>\n
Association chairman Kusudiarso Hadinoto said over the weekend
\nthat many local cable manufacturers had difficulty selling their
\nproducts at home as most orders from local buyers went to foreign
\ncable makers.<\/p>\n
The growth rate of imported cables averaged 16.5 percent
\nannually over the past five years, while \"most local producers
\ncry over the lack of orders since 1995\", Kusudiarso said.<\/p>\n
The value of imported cables jumped by more than 35 percent to
\nUS$270.5 million in 1996 from $199.1 million in 1995.<\/p>\n
According to the association, which has six optic-fiber cable
\nplants among its 34 members, copper cable makers have currently
\nlost much of their market as telecommunication companies replace
\ncopper cables with optic fiber cables.<\/p>\n
For instance, between 20 percent and 30 percent of cables to
\nbe used by the state-owned telephone company Telkom in the next
\nfive-year development plan beginning 1999 will be optic fiber.<\/p>\n
Indonesia's first cable plant was established in 1972. The
\nindustry made progress in the 1980s after the government
\ninstructed state-owned electricity company PLN and state-owned
\ntelephone company Perumtel (now Telkom) -- the main customers of
\ncable producers -- to prioritize cables made in Indonesia.<\/p>\n
To protect the local cable industry, the government imposed a
\nhigh tariff rate of between 30 percent and 40 percent on imported
\ncables, before reducing it to 15-20 percent, the current rate.<\/p>\n
These protective measures have not been much help.<\/p>\n
Kusudiarso said improving quality would be the only option to
\nenable association members to compete with the foreign cable
\nproducers.<\/p>\n
\"In talking about competitiveness, local cable producers
\nshould use an international benchmark to enable them to compete,\"
\nsaid Kusudiarso.<\/p>\n
He said it was now the time for local cable manufacturers to
\nconsolidate and readjust their operation to the current trends,
\nin which only good quality products would succeed.<\/p>\n
Indonesia's cable production grew at 17.5 percent per year
\nfrom 1992 to 1996. In the same period, the imported cables grew
\nby 16.5 percent.<\/p>\n
\"Based on this data, we can conclude that the actual growth of
\ndomestic demand for cables far exceeds the growth of local
\nproduction,\" Kusudiarso said.<\/p>\n
Beginning this decade, Indonesia has exported cables to the
\nUnited States, Australia, Japan and Europe, as well as developing
\ncountries such as Sri Lanka, Thailand and Iran.<\/p>\n
He said Indonesia's cable exports grew an average of 49.5
\npercent over the past five years. Exports jumped to $143.1
\nmillion in value last year, from $72 million in 1995.<\/p>\n
Despite the high export growth, Indonesia still suffers a
\ndeficit in its foreign cable trade.<\/p>\n
According to the association data, Indonesia's cable trade
\ndeficit was $127.3 million in 1996, up from $126.9 million in
\n1995.<\/p>\n
The cable trade deficit was worsened by the local cable
\nindustry's dependence on imports of raw material, he said, adding
\nthat it imported 35 percent of its raw material, worth Rp 572.6
\nbillion ($224.5 million), in 1995.<\/p>\n
Kusudiarso said the local cable industry would have to focus
\nas much on the domestic market as on exports, and make their
\nproducts as competitive as imports with the advent of the free
\nmarket era. (jsk)<\/p>",
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"sponsor": "Okusi Associates",
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