Economists welcome revitalization strategy
Economists welcome revitalization strategy
Adianto P. Simamora, The Jakarta Post, Jakarta
Economists welcomed on Monday the government's proposal to
revitalize four key manufacturing sectors -- textiles,
electronics, footwear, pulp and paper -- saying it would create
more jobs and help boost exports.
"This strategy is basically good because it can absorb many
workers and boost export revenue," Pande Raja Silalahi, an
economist at the Centre for Strategic and International Studies
(CSIS) told The Jakarta Post.
Pande, however, urged the government to immediately
communicate the policy to the banking sector to gain financial
support.
"The government needs to reassure them (both foreign and
domestic banks) because they are reluctant to channel new credit
to the real sector," he said.
"And the government should also explain that these four
sectors will become the country's prime mover for economic
growth," Pande said.
Minister of Industry and Trade Rini Soewandi proposed the
revitalization of these four industries in an attempt to counter
rising unemployment and slowing exports.
The recovery of these four industries is expected to create
350,000 new jobs and avoid layoffs.
The country's textile sector currently employs 250,000, the
electronics sector 1.19 million, the footwear industry 389,000,
pulp and paper 100,000.
Aside from the four sectors, Rini also proposed the
development of seven other industries -- leather, fishing, crude
palm oil, fertilizer and agricultural machinery, food, software,
as well as handicrafts and jewelry.
It said that the development of these seven industries would
absorb 809,000 new workers.
Revitalizing the four manufacturing sectors plus the
development of seven industries will also boost exports to
US$42.2 billion from $39.7 billion last year.
Meanwhile, Gadjah Mada University economist Sri Adiningsih,
said the new policy was crucial to avoid bankruptcy and layoffs
in the manufacturing sector, which has been badly hit by years of
economic woes at home and the current global economic slowdown.
Sri, however, added that the government's strategy should also
focus on boosting the competitiveness of local industries amid
tougher competition and increasing trade liberalization.
She added that in order to create more employment, the
government must also formulate a policy to boost the use of local
content in the above industries.
"In the long term, the government must focus on this issue,"
she said.
Some 80 percent of the local production system is believed to
depend on imported raw materials.
Separately, University of Indonesia economist Mohammad Ikhsan
criticized the government for being too late in launching the
revitalization strategy compared to its regional competitors.
He also said that it was important for the government to
create a conducive investment climate at home to allow the four
key manufacturing sectors to prosper.