Industrialization not viable in eastern Indonesia: Hadi<\/p>\n
JAKARTA (JP): An economist warned yesterday that the
\ndevelopment of the manufacturing industry in Indonesia's eastern
\nprovinces will not be viable in the long run.<\/p>\n
\"The government's policy on industrial expansion to eastern
\nprovinces, including Kalimantan, should just be left behind,\"
\nHadi Soesastro, executive director of the Centre for Strategic
\nand International Studies, said at a seminar here.<\/p>\n
He argued that building an industrial infrastructure in the
\neastern provinces is too expensive and that the manufacturing
\nindustry would not expand there, except for the processing
\nindustry.<\/p>\n
\"But we have to reduce our dependency on the processing-based
\nindustry as a foreign exchange earner because the industry is
\ndepleting the environment,\" Hadi said.<\/p>\n
He stressed that the development of the eastern provinces
\ncould not be carried out through industrialization.
\n\"Industrialization in these areas has to be avoided.\"<\/p>\n
The eastern provinces, with their natural habitats and
\necology, could be promoted for eco-tourism instead of
\nindustrialization, Hadi suggested. \"This way we could generate
\nmore foreign exchange as well as protect and preserve our
\nenvironment.\"<\/p>\n
Hadi, who discussed industry in the future of Indonesia at
\nyesterday's seminar, predicted that Indonesia's industrial
\ndevelopment would remain concentrated in Java through the year
\n2020.<\/p>\n
In 1990, 79 percent of Indonesia's manufacturing activities
\nwere concentrated in Java, 10 percent in Sumatra, 6.1 percent in
\nKalimantan, 1.2 percent in Sulawesi and 1.5 percent in other
\nprovinces.<\/p>\n
Lampung and South Sumatra will become bumper support for the
\nindustrialization of Java, while North Sumatra and Riau will grow
\nas new industrial centers through their integration with
\nSingapore and Malaysia, Hadi said.<\/p>\n
Powerhouse<\/p>\n
He forecasted that Indonesia will become a manufacturing
\npowerhouse or even an industrial giant in Asia by the year 2020,
\nthanks to the high growth of its manufacturing sector at an
\naverage of nine to 10 percent per annum.<\/p>\n
\"By that year, the size of Indonesia's manufacturing sector
\nshould be twice the current industrialization level of South
\nKorea or a bit larger than Britain's or close to Italy or
\nFrance,\" Hadi said.<\/p>\n
By the target year, Hadi noted that Indonesia's manufacturing
\nsector would contribute between 32 percent and 34 percent to its
\ngross domestic product. Last year, the contribution of the
\nmanufacturing sector was 23 percent.<\/p>\n
Hadi warned that the government's protection of the
\nmanufacturing sector remained high, despite having been reduced
\nseveral times through a number of deregulation packages.<\/p>\n
He said that although the nominal tariffs for the
\nmanufacturing industry ranged between 25 percent and 30 percent
\nbefore the last May deregulation package, the effective
\nprotection levels for many manufacturing sectors are much higher.<\/p>\n
\"Even effective protection levels for a number of sectors like
\nflour, cigarette, leather, shoes, tire, ceramic, electric
\nhouseholds and battery industries reach 600 percent,\" Hadi
\ncontended.<\/p>\n
He noted that high protection levels are one cause of
\nIndonesia's high economy. Adding to this are conglomerations,
\nmonopolistic and oligopolistic practices, cartels or cartel-like
\ninstitutions as well as collusion between business people and
\ngovernment officials. (rid)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/industrialization-not-viable-in-eastern-indonesia-hadi-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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