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)