Foreign engineering firms upbeat on RI's manufacturing sector
Fitri Wulandari, The Jakarta Post, Jakarta
There is great optimism among foreign engineering companies that Indonesia's economy is moving toward recovery, which would bode well for their businesses here.
This optimism was apparent during last week's four-day international manufacturing machinery exhibition in Jakarta, which featured companies from around the world, including from the U.S., the UK, Germany, the Czech Republic and Singapore. It was called the largest expo for industrial machinery in the country.
"Participants come here because they know that the economy is recovering and there is growth," said Indra Putra, director of exhibitions at Pamerindo Buana Abadi, the expo's organizer.
The participants seemed unperturbed by recent news that a growing number of the country's manufacturers are facing bankruptcy because of the poor economic climate, security problems, lingering labor disputes and rampant smuggling.
"There is a degree of political stability in the market and economic growth of three to four percent in Indonesia. It provides optimism for the future," Dai Harries, representative of the British Engineering Industries Association (EIA), told The Jakarta Post.
EIA, the largest trade association for industry in the UK, led 14 British companies at the exhibition looking for distributors and customers in the local market.
Of similar opinions were the director of the German Engineering Federation (VDMA), Hubert Laier, and the head of the Commercial Section at the Czech Embassy in Jakarta, Martin Basta.
"This is a period when Indonesia's economy is shifting from stabilization to growth. We come at the right time to promote foreign trade with Indonesia," Basta told the Post.
"The three to four percent economic growth encourages us to come to Indonesia, and we hope to enlarge our market," Laier said.
Eighteen Czech companies took part in the exhibition offering various manufacturing machinery, from woodworking to food processing equipment.
Meanwhile, Germany was represented by 25 exhibitors, led by VDMA. Laier said the number of German exhibitors increased from 14 last year.
This optimism flies in the face of the negative news coming out about the country's economy and manufacturing sector.
Foreign direct investment and domestic investment approvals have declined for a number of reasons, including labor conflicts, poor labor policies, a poor implementation of the autonomy law and global economic uncertainty.
And many manufacturing companies in the country are going out of business. The Association of Footwear Manufacturers (Aprisindo) reported that some 100 local footwear manufacturers had closed down their factories over the last three years.
The toy industry is facing a similar situation, with some 60 local companies going bankrupt and 40 others struggling to survive.
However, for many expo participants Indonesia remains a market full of potential.
"Indonesia's consumption power is so big, we hope to build up closer trade relations with Indonesia," Eugene Lim, the manager of the Singapore Precision and Tooling Association (SPETA), said.
SPETA led some 15 Singaporean manufacturing companies to the event. Lim said that next year more Singaporean engineering companies were expected to take part in the exhibition.
Despite the optimism, expo participants continued to harbor some worries. Most participants said the government's inability to provide legal certainty would dampen optimism.
"I would say the labor law will be one aspect that could depress the economic recovery," Dai Harries said.
The exhibition itself was a success, seemingly justifying the participants' optimism.
"This was the biggest exhibition since 1997. We never expected that it would be this successful given last year's exhibition," Indra Putra said.
The number of visitors jumped from 27,000 people in 2001 to 53,400 this year.
And the number of participants also increased significantly, from 1,100 in 2001 to 1,500 this year.