Policies needed to boost industrial competitiveness<\/p>\n
JAKARTA (JP): The government needs to encourage restructuring
\nin the textile industry and upstream-downstream integration in
\nthe palm oil sector to maintain their international
\ncompetitiveness, experts said yesterday.<\/p>\n
At a seminar held by the Centre for Strategic and
\nInternational Studies (CSIS), analysts also suggested the
\ngovernment open the petrochemical industry's upstream sector to
\nmore competition to strengthen the industry.<\/p>\n
Mari E. Pangestu of CSIS and Chamroel Djafri of the Indonesian
\nTextiles Association agreed that the country's textile-related
\nindustries were losing their international competitiveness due to
\nrising costs.<\/p>\n
\"The textile and clothing industry is at a crucial crossroad
\nand at an important stage of its transition phase toward
\ndevelopment and structural change,\" Mari said.<\/p>\n
The textile and textile-related industry was one of
\nIndonesia's largest foreign exchange earners with annual exports
\nexceeding US$6 billion. But the industry has been rendered less
\ncompetitive by old and inefficient plant equipment and rising
\ncosts.<\/p>\n
Given its large export contribution, about 15 percent of the
\ncountry's total exports, the industry now must enter the next
\nstage of development by producing higher quality fiber and yarn,
\nhigher quality synthetic fabrics and higher value-added clothing
\nitems, she said.<\/p>\n
\"It will be important to provide a conducive business climate
\nand think of ways in which the government can provide assistance,
\nsuch as through training and facilitation measures, as well as
\nproviding supporting infrastructure,\" Mari said.<\/p>\n
Chamroel said the government could help the textile industry
\nby abolishing, rather than refunding, value-added tax paid on raw
\nmaterials bought from domestic suppliers.<\/p>\n
He said that strong textile exports in the past were made
\npossible by large investment in the sector. And the sector now
\nneeded new investment to restructure and upgrade its machinery to
\nmaintain export performance.<\/p>\n
Other than restructuring and upgrading, the sector should also
\nimprove linkages and alliances between its upstream, mid-stream
\nand downstream segments.<\/p>\n
On the palm oil industry, Yuri Sato of Japan's Institute of
\nDeveloping Economies said the industry's prospects were no doubt
\nvery bright due to the increasing world demand for crude palm oil
\nand processed products.<\/p>\n
But Indonesia's present advantages in the industry were not
\nfirmly-rooted but depended on cheap variable costs, especially
\nlabor costs, she said.<\/p>\n
She suggested Indonesia cultivate stronger competitive
\nadvantages by developing a processing industry so it would not
\nonly become a major supplier of raw material but also of
\nprocessed products.<\/p>\n
\"What the government should do is not ban new foreign
\ninvestment in oil palm plantations but introduce a policy which
\nprovides incentives to investors entering the processing
\nindustry,\" Sato said.<\/p>\n
Economist Djisman S. Simandjuntak said the government needed
\nto deregulate the upstream sector of the petrochemical industry
\nto more competition.<\/p>\n
\"The government always protects large businesses, and in the
\npetrochemical industry the large businesses are usually in the
\nupstream. If those in the upstream are protected, they burden
\nthose in the downstream operations, which are mostly small and
\nmedium firms,\" Djisman said.<\/p>\n
He also suggested the government deregulate the production and
\ndistribution of petrochemical raw materials -- natural gas,
\nnaphta and condensate.<\/p>\n
\"While the distribution of those raw materials is still
\ncontrolled by (state-owned oil firm) Pertamina, no private
\ninvestor will dare to invest in refining,\" Djisman said.<\/p>\n
Irwanto Hartono of PT Amoco Mitsui said the long list of
\ninvestment projects already licensed in the petrochemical sector
\nwould discourage new investors from entering the sector.<\/p>\n
He said he suspected that most investors included on the list
\nwere not really serious about realizing their projects.<\/p>\n
\"They just want to secure licenses so they can sell them at
\nhigh prices when the sector is closed to new investment,\" Irwanto
\nsaid.<\/p>\n
\"The board should be more selective in licensing petrochemical
\nprojects. It should license those which are serious and capable
\nof investing in the sector,\" he said. (rid)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/policies-needed-to-boost-industrial-competitiveness-1447893297",
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