German firms to go ahead with RI high-tech expo despite crisis
German firms to go ahead with RI high-tech expo despite crisis
By Reiner S.
BERLIN, Germany (JP): German high-tech companies will proceed
with plans to hold a major exhibition in Jakarta despite the
ongoing political unrest and economic crisis in Indonesia in a
move to reaffirm a long-term commitment to the country.
A total of 200 German companies are expected to participate in
the DM 9 million (US$5.43 million) TechnoGerma exhibition on
March 1-7 at the Jakarta Convention Center.
"We aim to strengthen business relations between Indonesia and
Germany," says Gunther Graf, managing director of IMAG
(International Exhibition and Fair Service Ltd.), the organizer
of the exhibition.
"The target is to make as many business contacts as possible,
not business contracts," he adds, pointing out that transaction
deals could not be expected due to the economic crisis.
TechnoGerma is Germany's largest overseas exhibition held
every four years, and is financed by both the government and the
business sector.
Participants in next year's event are mostly medium-sized
industries with leading edge technology obtained partly through
massive spending on research and development at an average of 10
percent of turnover per annum. The logo for the exhibition says:
"There's no substitute for German technology."
"We discussed the Indonesian crisis issue with participants
and the government in June 1998 and we decided to proceed with
the plan," Graf said, adding that preparations for next year's
exhibition started two years ago and that a lot of money had
already been spent since then.
"Delaying it will not be good for improving relations with
Indonesia," he adds, suggesting that such a move may harm
confidence in Indonesia.
Many German companies regard Asia, and particularly Indonesia,
as their most important export market. They have suffered a
significant drop in sales this year due to the economic crisis in
the region.
They say that Indonesia -- and the rest of Asia -- has to
recover from the crisis or they would be in serious trouble.
Sales drop
Alexander Batschari, executive director for press and public
relation at the German Machinery and Plant Manufacturer's
Association, says that the association's combined turnover in
1998 is expected to drop by more than 60 percent to DM 275
billion due to the Asian crisis.
The industry is Germany's second largest exporter after the
auto industry.
Werner Schmidt, managing director of German Electrical and
Electronic Manufacturing Association, says that exports to
Indonesia are also expected to drop to DM 700 million this year
from DM 1.2 billion in 1997.
"We expect a recovery in the year 2000," says the executive of
the 1,420 members association with a combined turnover of DM 245
billion and exports of DM 136 billion last year.
Harry J. Hackl, executive vice president for marketing and
sales of Voith Sulzer Papiermaschinen GmbH, a medium-sized paper
machine maker says that his company, with 64 percent of business
volume coming from Asia, had not suffered much from the Asian
crisis because of its significant share in the European market.
"But this can't go on for a longer period. Asia has to
recover, otherwise we'll be in trouble too," he says
He says that his company will soon open a service center in
Indonesia to enlarge business volume and contacts in the country,
Hackl says.
Indonesia's paper market has a substantial potential, pointing
out that paper per capita consumption here is only 19 kg, which
is far below the 100 kg/capita in Hongkong, Taiwan and Thailand,
he says.
"An increase of 10 kg/capita will require five to six big
paper machines," he points out, adding that this can only happen
at a GDP growth of 4-5 percent.
Hackl also says that the local paper makers greatly benefit
from the large raw materials provided by the vast forest
resources.
"So Indonesia remains our priority market," he adds.
Voith's largest customer in the country is Sinar Mas Group's
Indah Kiat Pulp and Paper manufacturer with total orders
amounting to nearly DM 1 billion.
Martin Lange, a member of the managing board of Man Roland
Druckmaschinen AG, a high speed printing machine manufacturer,
also expects Indonesia to recover soon to maintain its market
share as the relatively small DM 10 billion worth worldwide
demand for printing machines is being pursued by many
competitors.
He says that during the 1997/1998 business year ending in June
the company received DM 50 million in order from Indonesia's
giant stationery maker PT Tjiwi Kimia who bought 20 units. The
company is a unit of the country's second largest conglomerate,
the Sinar Mas Group.
"This is one of the largest overseas orders ever awarded to
MAN Roland," he says.
Order falls
Fritz Lohr, a key executive at the world's leading
telecommunications system and data networks company KRONE
Aktiengesellschaft, says that exports to Indonesia are expected
to drop by 80 percent this year.
The crisis has caused orders for its latest wireless
technology to be canceled by the country's joint operation fixed
lines telecommunications providers (KSOs), he points out.
The company, which exports 80 percent of its products, also
regards Indonesia as one of its important export markets. It
also has a US$5 million plant in the country manufacturing
telecommunications optic fiber components.
"Our Indonesian operation can survive because it has managed
to export its products to Europe and Australia," Lohr says.
German companies believe in the prospects of doing business in
Indonesia.
He also believes in similar prospects for the country's
telecommunications sector which only has a telecommunications
penetration rate of less two lines per capita, the lowest in the
region.
He says, however, that gaining good business in Indonesia will
require a stable exchange rate of the rupiah against the U.S.
dollar.
But a sustainable stability in the currency, and economic
recovery, will very much depend on the return of confidence in
the country.
"The implementation of the general election and its outcome
will be important in bringing back confidence," says Erich T.
Geis, chief economist at Kreditanstalt fur Wiederaufbau (KfW), a
state-owned bank which has been active in making loans to the
Indonesian government and private sector.
Indonesia is expected to hold a general election in June next
year in a more open political environment resulting from the fall
of former president Soeharto.
Geis, however, stresses that KfW will not close down projects
financed by the bank despite the mounting social unrest in the
country.
"We are a long-term investor, and our commitment to the
country is always on a long-term basis," he adds.
KfW has so far provided Indonesia with a total of DM 3.8
billion, mostly in soft term G to G loans. The bank recently
channeled DM 300 to the Indonesian government, of which DM 250
million is expected to help local exporters in buying imported
raw materials.