Competitive grade edge called engine of growth
JAKARTA (JP): Economists said at a seminar yesterday that modernization in the industrial and trade sectors is the key to the maintenance of the country's competitive edge before entering the era of globalization and liberalization.
"And modernization can happen if it is supported by a transparent business environment, consistent government policies, fairness and equal treatment and a strong political commitment," the statement concluded.
Yesterday's seminar was held to commemorate the 79th birthday of senior economist Sumitro Djojohadikusumo.
Dorodjatun Kuncoro-jakti, a senior lecturer at the University of Indonesia, who acted as a panelist at yesterday's seminar, talked about trade being the engine of growth.
"And trade has played an important role in stabilizing the international inflation rate, which currently stands at 4 to 5 percent worldwide, against Indonesia's figure of 8 to 10 percent," he noted.
Dorodjatun said international trade has witnessed a more convincing availability of products with faster product distribution.
On the industry side, Dorodjatun also cited the latest trend in the creation of global consortiums, particularly in the telecommunications and aircraft industries, to collaborate in designing and manufacturing new products.
"The trend is based on an assumption that many products will gradually lose their profit margin. And a larger volume and distribution is expected to maintain a bigger profit margin," he said.
The current situation, according to Dorodjatun, highlights the inter-nation, inter-industry and intra-region characteristics of international trade and industry.
Dorodjatun and another panelist, Herman Z. Latief, shared the idea that in a situation in which consumers' interests easily change, product production should be based on the right idea, right time and right entry point.
"Moreover, a product's life cycle is very short now," Dorodjatun said.
Accelerating industrial and trade development, according to Dorodjatun and Latief, will eventually be pointless if it is done without clear objectives.
Latief cited as an example that England used to be a major car producer in Europe. But today, the English automotive industry has been left behind by other competitors.
Latief also said that Malaysia with its "Proton Saga" national car, currently faces serious difficulties owing to high production costs.
He said that in the automotive sector, Indonesian firms still import thousands of spare parts and components.
"And I would say that the situation in the automotive industry reflects the situation in other industries in this country," Latief noted.
Another economist, Mohamad Sadli, questioned whether Indonesia's national car project, sponsored by Hutomo Mandala Putra's PT Timor Putra Nasional, is in line with the country's efforts to modernize the industry.
The government has selected the company to produce national cars with a local content of 60 percent by the end of the third year of its operation. But it is allowed to import such cars from South Korea before being able to operate its assembly plant.
Meanwhile Sudradjad Djiwandono, the governor of the central bank, Bank Indonesia, disclosed several problems threatening the Indonesian economy, including the uncertainty in the international economy and tougher competition with the emergence of several newly-industrialized countries.
"In the short term, we should try to find new export destinations because our major trading partners like Japan are facing their own economic problems," he noted. (alo)