Bappenas to help set strategy for manufacturing sector

Bappenas to help set strategy for manufacturing sector

Zakki P. Hakim, The Jakarta Post, Jakarta

The Ministry of Industry, together with the National
Development Planning Agency (Bappenas), planned to set up a
national strategy for the revival of the ailing manufacturing
sector, a senior official said.

New Minister of Industry Andung A. Nitimihardja said that the
plan was discussed during the first Cabinet meeting of the new
government of President Susilo Bambang Yudhoyono on Friday.

"We will set the strategy together with Bappenas," Andung told
reporters.

He added that part of the strategy would be on how to push
banks to lend more money to the manufacturing sector.

The country's manufacturers have fallen on rough times since
the late 1997 financial crisis marked by a five-fold drop in the
local currency and a surge in domestic interest rates during the
early period of the crisis. That, in turn, inflated their dollar
and rupiah-based debts, sending some of them into bankruptcy,
while others had to scale down their businesses and lay off
employees.

But as the country starts to recover from the crisis, most
banks remain reluctant to lend badly needed funds to the
manufacturing sector due to the lingering risks amid slow
progress in debt restructuring. This has created difficulties
for the manufacturers, who need to obtain working capital to
replace aging machinery, a condition which has made them less
efficient and uncompetitive against more efficient manufacturers,
particularly those from China, both in the domestic and overseas
markets.

The poor investment climate in the country has further
worsened the situation.

Observers have said that since the financial crisis, the
government has failed to come up with a clear strategy to revive
the troubled sector.

Andung said that his office would review the blueprint
prepared by the previous minister of industry and trade Rini MS
Soewandi, and if possible, adopt part of the strategy.

Rini's strategy consisted of mid-term and long-term
development plans for various manufacturers including textile and
textile products, electronics, automotive, components,
communication technology equipment and machinery.

The development plans were divided into two timeframes. The
first one is from 2005 to 2009, while the longer term strategy is
for 2010 until 2020.

Furthermore, Andung said that he would require at least a week
before deciding on the programs, after intensive talks with his
senior officials and other related ministers.

Starting on Monday, the minister and his staff will have an
office at a building previously called the ministry of industry
and trade on Jl. Gatot Subroto, South Jakarta. While Minister of
Trade Mari E. Pangestu will move into an office on Jl. Ridwan
Rais in Central Jakarta. Under previous governments, the two
ministries were merged into one, the ministry of industry and
trade, which had two office buildings.