'If our neighbors take our market, we will lose national pride'<\/p>\n
The Jakarta Post\/Jakarta<\/p>\n
Local electronics producers claim that 50 percent of the
\nelectronic goods traded in Indonesia are illegally brought into
\nthe country. This situation has hampered domestic growth and
\ndiscouraged new investment. The Indonesian Chamber of Commerce
\nand Industry's (Kadin) vice chairman for industry, technology and
\nmaritime affairs, Rachmat Gobel discussed the situation in a
\nrecent meeting with The Jakarta Post. The following are excerpts
\nof his presentation:<\/p>\n
In view of our domestic market potential, we must be able to
\nestablish a strong electronics industry, which not only produces
\nend products but also components.<\/p>\n
As a matter of fact, the component industry is supporting not
\nonly electronics, but also the automotive sector, which also
\nneeds electronic parts.<\/p>\n
The development of both industries would also encourage the
\ndevelopment of the plastics industry, which contributes a lot to
\nthe making of electronic and automotive products.<\/p>\n
In short, these industries are interconnected, but the most
\nimportant of all is that they are all labor-intensive.<\/p>\n
With 220 million people, our domestic market is big enough to
\nsupport the development of the electronics industry, not to
\nmention the regional and international markets.<\/p>\n
Electronic goods are the country's second largest non-oil and
\ngas exports after textiles and garments. Their exports reached
\nUS$7.05 billion last year.<\/p>\n
However, the figure is a drop in the bucket compared to the
\nexports from the Philippines and Thailand. Electronics exports
\nfrom each of those countries reached at least $25 billion last
\nyear.<\/p>\n
Indonesia could emulate them by establishing a strong base in
\nthe 'low-tech' electronic sector with the domestic market as the
\nmain support. The industry will first supply the domestic market,
\nbefore exporting their products.<\/p>\n
Consumer electronic products such as conventional color
\ntelevisions, refrigerators, air conditioners and washing machines
\nare now considered low tech electronics.<\/p>\n
However, the growth of the local low-tech industry has been
\nhampered by the rampant smuggling of electronic goods, as 50
\npercent of the electronics traded in the country are smuggled
\nproducts.<\/p>\n
Without domestic market support, it is difficult for us to
\ndevelop a strong low tech industry, let alone moving to the
\n"high-tech" sector.<\/p>\n
The Indonesian Chamber of Commerce and Industry (Kadin) has
\nsubmitted to the government a roadmap describing all problems
\nconfronting the local industries -- problems that the government
\nneeds to immediately solve in order to boost the private sector
\nand to attract fresh investment, which is badly needed to create
\njobs.<\/p>\n
Among the problems are the rampant smuggling, unfavorable tax
\npolicies, unattractive labor laws and the lack of infrastructure.<\/p>\n
If the government is able to implement 50 percent of the
\nrecommendations spelled out in the roadmap, I believe there will
\nbe fresh investment of up to $2 billion in the electronics
\nindustry alone within the next five years.<\/p>\n
The next step that the government needs to take is to
\nformulate its "target, vision and mission" for the domestic
\nelectronics sector for the next five years, and the next 10
\nyears.<\/p>\n
The government needs to formulate a five-year plan for itself,
\nand the 10-year program for us to anticipate the ongoing
\nliberalization under the World Trade Organization.<\/p>\n
Without a broad overall understanding of where our industry is
\nheading, our domestic market will be easy pickings for our
\nneighboring countries.<\/p>\n
If that happens, we will lose our national pride.<\/p>\n
A similar situation also occurs in other industries, such as
\nthe tourism, or our own batik industry.<\/p>\n
Take for example, Malaysia; the new Prime Minister (Abdullah
\nBadawi) and his wife want to register a patent for Malaysian
\nBatik.<\/p>\n
If Malaysia succeeds in registering a patent for the word
\n"batik", we might have to pay royalties to Malaysia when we
\nexport our own homemade batik.<\/p>\n
Recently, a tourism association leader told me that they had
\nto request the Japanese government's permission to use the song
\n"Bengawan Solo" in a tourism advertisement. The patent for the
\nsong is held by Japan.<\/p>\n
I've heard a similar story concerning our jamu (herbal drink)
\nindustry.<\/p>\n
The jamu industry was an original Indonesian industry. We have
\nan exclusive intellectual property right over jamu, which we
\nhave inherited from our ancestors for centuries. However, one of
\nour neighboring countries apparently has a better plan to develop
\nthe industry.<\/p>\n
I heard that Malaysia had planned to hold a convention on
\njamu, but fortunately, Indonesian associations rejected the idea
\ndue to worries that Malaysia might want to own the patent rights
\non all jamu.<\/p>\n
When Brunei talks about jamu, it always mentions Malaysia
\nrather than Indonesia, whereas we all know where jamu actually
\ncomes from.<\/p>\n
Both batik and jamu, as well as other traditional Indonesian
\nindustries absorb a huge number of workers. Sadly, however, we
\nare still unable to protect the intellectual property rights of
\nour traditional industries.<\/p>\n
If we can't protect and develop these, how can we protect and
\ndevelop the electronics and automotive sectors, how can we shift
\nto the 'middle-tech' level of electronics?<\/p>\n
This is our main concern for the next five to 10 years.<\/p>\n
We must move fast, both the private sector and the government
\nmust work together to build the vision of where we want to go.<\/p>\n
We have to set a target on how to get at least closer to the
\nThais and Filipinos -- electronics exports of $25 billion --
\nwhich is nearly four times more than our current export income.<\/p>\n
I do believe that we could get close to those two countries.<\/p>\n
The electronics industry will naturally grow, even if the
\ngovernment does nothing. However, if the government implements
\nKadin's roadmap, we are optimistic we can grow two to three times
\nfaster.<\/p>\n
Besides, the nation also needs to form a blueprint for the
\ndevelopment of local industries through 2010.<\/p>\n
I believe we should prioritize natural resource-based
\nindustries, in view of our strong base of natural resources and
\nlarge population.<\/p>\n
If we succeed, we will become a strong nation.<\/p>\n
However, we have first to solve the smuggling problem.<\/p>\n
The encouraging news is that soon after President Susilo
\nBambang Yudhoyono declared smuggling as the top concern of his
\nadministration, illegally imported goods started to pile up in
\nports.<\/p>\n
This is a good example of how we can stop smuggling if we have
\nthe will.<\/p>\n
.TB1.80" 2.50" 3.30" 4.00" 4.70"
\nDomestic demand for major consumer electronic products
\n(in 000 unit)
\n---------------------------------------------------------<\/p>\n
1999 2000 2001 2002 2003
\n---------------------------------------------------------
\nColor TVs 737 2,000 2,400 2,520 2,650
\nRefrigerators 547 920 1,170 1,590 1,720
\nAir Conditioners 85 173 270 370 520
\nWashing Machines 96 179 240 350 400
\n----------------------------------------------------------
\nSource: Electronic Marketers Club<\/p>",
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