Electronics industry looks for investment

Electronics industry looks for investment

JAKARTA (JP): Indonesia needs more investment in the
manufacture of electronic components to strengthen the structure
of the country's electronic industry, Minister of Industry and
Trade Tunky Ariwibowo said yesterday.

Tunky said in a written speech at an electronics seminar here
yesterday that Indonesia wants to develop a competitive
electronic industry with a strong base of locally-built
components.

"The policy for developing the electronics industry in
Indonesia encourages the multi-sourcing of components... which
will result in competitive products with high local content,"
Tunky said at the seminar, conducted by the Indonesian Electronic
Industry Association to coincide with the visit of 36 executives
from electronic vendors in Nagano, Japan.

The Nagano investment mission here is a counter-visit to the
Indonesian electronic industrial tour, led by Tunky, to Nagano,
Japan, in November last year.

Tunky noted that the electronic industry is expected to become
one of the country's largest foreign exchange earners within the
next few years. By the end of the current five-year development
plan, in March 1999, electronics exports should contribute US$6.5
billion or 11 percent to Indonesia's total exports, Tunky said.

Last year, Indonesia's exports of electronic goods totaled
US$2.9 billion, representing a 13.4 percent increase over the
$2.6 billion in the previous year.

Indonesian electronic goods exports are mainly TVs, radio
cassette recorders, video-cassette recorders, and car-audio
equipment.

Imports

Such high export revenues from electronics, however, did not
contribute much to Indonesia's balance of trade as most of the
export earnings were used for electronic component imports, which
stood at $2.3 billion last year and $1.9 billion in 1994.

These electronics imports mostly consisted of components such
as TV tubes, capacitors and integrated circuits.

Currently, Indonesia imports some 30 percent of its electronic
components from Japan and the remainder from Thailand, Taiwan and
Malaysia, where most component manufacturers are also Japanese
and U.S. companies.

Tunky said Japanese investment in electronic investment here
had increased by 14.8 percent per annum during the 1991-1995
period -- from $215.2 million in 1991 to $374 million last year.

Uripto Wijaya, chairman of the electronic industry
association, said that his association, in cooperation with the
government, plans to establish an electronic component industrial
estate to persuade more component manufacturing plants to
relocate from abroad.

The planned industrial estate in Cikampek, West Java, will
require an investment of Rp 150 billion (US$66.6 million).

Uripto further explained that 11 electronics companies from
Nagano had signed memoranda of understanding with Indonesian
partners to establish joint-venture manufacturing facilities on
the estate.

"Eight of the 11 vendors will soon set out their investment
plans," Uripto said.

Meanwhile, Fadel Muhammad of the Bukaka Group said that the
industrial estate must be competitive in terms of land prices so
that it will truly become a special estate for the electronic
component industry.

He said his group, which focuses on engineering and
manufacturing of heavy equipment, would also enter the electronic
industry, in cooperation with a Korean firm. He did not disclose
the name of the firm. (rid)