Championing local products<\/p>\n
President Soeharto's call last week for people to show
\nnational spirit by preferring domestic products over foreign ones
\nmay sound like an old, strange song to affluent consumers,
\nespecially in the current era of economic globalization. But
\nSoeharto's appeal to the general public to make the promotion of
\ndomestic products a national drive is not only relevant, but is
\neven more essential now to help the domestic manufacturing
\nindustry improve their competitiveness in an open, global market.<\/p>\n
The President rightly argues that many local products already
\ncompare well with imported goods, and are even better in some
\ncases, in quality and price. His viewpoint is supported by the
\nsteady growth of Indonesia's industrial exports, such as
\ntextiles, garments, electronics, footwear, machinery and a wide
\nvariety of other goods. As labor-intensive, light industries face
\nkeener competition from countries which offer cheaper labor,
\ndomestic manufacturers are being forced to produce higher value-
\nadded products such as machinery, equipment and appliances to
\nremain competitive. This restructuring process, at least in an
\ninitial stage, would not run smoothly without direct government
\nassistance and intervention.<\/p>\n
The industrial complex of the Texmaco Group in Karawang, West
\nJava, where Soeharto renewed his campaign for a higher sense of
\nappreciation of domestic products, could not have been a better
\nshowcase of how advanced our manufacturing capability has become.<\/p>\n
The purified terephthalic acid (PTA) plant he dedicated had
\nbeen built mostly by Texmaco technicians. Most of the machinery
\nand equipment of the sophisticated, high-tech chemical factory
\nwere also fabricated at the same complex. The President saw
\nhimself Texmaco's capability to manufacture a wide range of
\nmachinery, including weaving and textile processing machines with
\ncomputerized operating systems, computerized numerical control
\nlathes and various other equipment and machinery for chemical and
\ncement factories. In fact, the Texmaco industrial complex is the
\nfirst heavy engineering and fabrication enterprise in Southeast
\nAsia to use titanium as a raw material.<\/p>\n
However, verbal appeal, even if directly by the President, is
\nonly a small element of the ongoing campaign needed to promote
\ndomestic goods. An environment should be created that would make
\ndomestic products more appealing to individuals and industrial
\nconsumers. In the late 1970s and early 1980s, the cabinet
\nincluded a junior minister who was made especially in charge of
\nchampioning local products. The President's office also had an
\ninterministerial team to make sure that government procurements
\nfavored local products. Both institutional instruments no longer
\nexist. Likewise, the high tariff and non-tariff protection given
\nto the domestic industry have been sharply decreased as part of
\nan economic reform measure to cope with the economic
\nglobalization process.<\/p>\n
Obviously, domestic manufacturers can no longer expect
\ngovernment protection, as such a measure is ineffective in the
\nlong run. Neither is it in conformity with Indonesia's commitment
\nto the global trade system under the World Trade Organization.<\/p>\n
But the President reiterated that government procurements
\nshould be better managed to ensure that they favor domestic
\nproducts. This is a good sign, because it is the government that
\nshould lead the campaign in showing people that domestic products
\nare not inferior to foreign ones.<\/p>\n
The promotion of domestic products, notably capital goods such
\nas machinery and equipment, not only becomes more urgent now, but
\nis also essential in supporting further development of
\nmanufacturers, who have invested a great deal in acquiring
\ntechnology and expertise to produce such modern machinery and
\nequipment. Manufacturers themselves should obviously do their
\npart in promoting their products, especially in boosting users'
\nconfidence in the quality and reliability of their goods.<\/p>\n
The marketing campaign conducted by manufacturers and
\npreferential treatment given by the government is not sufficient.
\nCredit financing is especially crucial for the marketing of big-
\nticket items such as capital goods. Here, we think the
\ngovernment, through the central bank and state banks, could play
\na greater role in enabling manufacturers of high-quality
\nmachinery and equipment to provide credit to buyers. Without
\nlong-term, low-interest loans, it would be extremely difficult
\nfor domestic manufacturers, already burdened with high domestic
\ninterest rates, to compete with foreign suppliers.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/championing-local-products-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}