Government urged to open upstream chemical industry

JAKARTA (JP): A chemical industry executive asked the government yesterday to open the industry's upstream sector to more competition to boost the downstream sector's development.

Indonesian Chamber of Commerce and Industry (KADIN) chemical industry division chairman Azis Pane said downstream chemical industries were developing slowly because upstream industries did not give enough support.

He was speaking after meeting Minister of Industry and Trade Tunky Ariwibowo yesterday.

"If the downstream industries can grow at 20 percent a year, it is already very good," he said.

Central Bureau of Statistics figures show Indonesia had 2,276 chemical companies in 1994. The chemical industry grew by 1.18 percent a year during the Fifth Five-Year Development Plan which ended in 1994.

Azis said Indonesia had to be more outward-looking because global free trade and investment gave it no choice.

Tranparency

He said there were only 13 foreign investors in the chemical industry because of the government's "lack of transparency".

Azis was referring to the government's ambiguous policy toward the industry.

In February last year the government gave the politically well-connected PT Chandra Asri Petrochemical Center permanent tariff protection.

Previously the firm's ethylene and propylene were temporarily protected by a 20 percent import surcharge on top of the 5 percent import tariff on both olefin products.

Deregulation measures issued in June planned to reduce gradually import tariffs on ethylene and propylene from 25 percent to a maximum of 10 percent by 2003.

Azis said the government should open the upstream industry and allow foreign investors into the market.

"The downstream sector can actually develop quite well. It is the upstream sector which is often subject to a bottleneck," he said.

Azis said KADIN planned to hold an international business forum for the chemical industry in Bali in September.

"We expect this forum to be attended by some 600 major players of the industry from around the world. We would like them to get a firsthand look at the situation of Indonesia's chemical industry, market and business climate," he said.

Azis said he expected foreign investors to play a bigger role in the agrochemical industry in particular.

"The minister fully supports us," he said. (pwn)