Deregulation not enough to address high costs<\/p>\n
JAKARTA (JP): Sofyan Wanandi, chairman of the widely-
\ndiversified Gemala business group, welcomes the latest reform
\nmeasures but says the new package alone will not strengthen the
\ncompetitive edge of industries.<\/p>\n
Sofyan praised the definitive scheduling of import tariff cuts
\nfor the next eight years to 2003 because the measure will provide
\na high degree of certainty for investors in planning projects.<\/p>\n
The latest reform package cuts import tariffs, reduces non-
\ntariff barriers, simplifies some licensing procedures and opens
\nnew business areas to foreign investors.<\/p>\n
"But I think the new package alone is not enough," said
\nSofyan, who is viewed as spokesman for most of the country's
\nbiggest conglomerates grouped in the Prasetiya Mulya foundation.<\/p>\n
He cited two other important tasks which should be undertaken
\n-- designing a better industrial policy that focuses on the areas
\nwhere Indonesia has the strongest competitive advantage and
\nabolishing the high-cost elements of the economy.<\/p>\n
"In my view the momentum of the economic reform process
\nencompasses not only tariff cuts and other forms of deregulation,
\nbut also, and even more important, more concerted efforts to
\nremove the high cost components of the economy," Sofyan told The
\nJakarta Post on Wednesday.<\/p>\n
He acknowledged that the tariff reduction would help cut the
\ncosts of imports.<\/p>\n
"But as long as Indonesian industrial companies are still
\nbearing numerous unnecessary costs related to the implementation
\nof regulations and procedural paperwork they will not be able to
\nremain competitive against suppliers from other countries," he
\nsaid.<\/p>\n
Sofyan added that on top of those high costs businessmen in
\nthe country are also paying much higher rates for funds than
\ntheir competitors overseas.<\/p>\n
"The domestic interest rates now exceed 20 percent and they
\nmay still increase in view of the likely tougher monetary policy
\nof the central bank," he said.<\/p>\n
Industrialists overseas pay interest rates of only between 6
\npercent to 7 percent, Sofyan said.<\/p>\n
"I think the government has been fully aware of the
\nunnecessary costs incurred in the regulatory paperwork and the
\nprocessing of various kinds of licenses. They are the main causes
\nof the high-cost economy.<\/p>\n
"If these costs are not slashed, while the domestic market has
\nbeen opened wider to import competition through tariff cuts and
\nreduction of non-tariff barriers, many small and medium-scale
\nbusinesses may be edged out of the market," Sofyan cautioned.<\/p>\n
Given the tougher competition in the international market,
\nembarking on more concerted efforts to stop the wastage is
\nimperative.<\/p>\n
Sofyan also stressed the urgent need for the government and
\nbusinessmen to design a better industrial policy which focuses on
\nthe areas where the country possesses the strongest competitive
\nadvantage.<\/p>\n
"The broad-based industrial policy has succeeded in expanding
\nand strengthening the foundation of our manufacturing
\nindustries," he noted.<\/p>\n
But in the run-up to the free trade areas within ASEAN and the
\nAsia Pacific region in the year 2003 and 2020 respectively,
\nIndonesia urgently needs a clearer direction for its industrial
\npolicy.<\/p>\n
"We should take stock of the industrial products in which we
\ncommand the strongest competitive advantages and zero in our
\nresources on developing them into highly competitive exports on
\nthe world market," Sofyan added. (vin)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/deregulation-not-enough-to-address-high-costs-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}