Govt attempts to nurture stagnant high-tech industry

Rendi A. Witular, The Jakarta Post, Jakarta

Indonesia is striving to become a supplier of telecommunication equipment and infrastructure within five years, with a blueprint currently being drafted that contains the necessary policies for developing the industry.

Included in the blueprint will be a number of fiscal and non- fiscal incentives for local investors willing to initiate the manufacturing of telecommunication equipment, said Basuki Yusuf Iskandar, the newly installed director general of post and telecommunications.

Basuki's directorate is now under the auspices of the Office of the State Minister of Information and Telecommunications.

"Indonesia is lagging behind in telecommunication equipment and infrastructure manufacturing. My first strategy to develop the industry will be to prepare a blueprint for it," Basuki told The Jakarta Post when accompanying President Susilo Bambang Yudhoyono in a ceremony on Monday.

The blueprint will be made in cooperation with the Office of State Minister of State Development Planning and the Ministry of Industry. It is hoped it will be completed by early next year.

Despite the rapid progress in the country's telecommunication service providers, Indonesia has little to offer in manufacturing telecommunication equipment and infrastructure, due to the lack of capital and skilled human resources for operating a manufacturing plant.

In order to encourage local investors to engage in the industry, the government will offer fiscal incentives, namely an exemption on import duty for capital goods as well as reduction in value-added tax and income tax, Basuki said.

Basuki said that the focus of the industry in the near future would be on the manufacturing infrastructure for telecommunication networks, mobile handset and satellite equipment.

"The strategy is also aimed at making the country self- sufficient in providing such facilities. We want our industry to also play a role in the global market," he said.

Basuki's other strategy to develop the industry is to make Telkom a global telecommunication company.

"The directorate is obliged to support Telkom in order to make the company more profitable and to expand overseas," he said.

Basuki said that his directorate would gradually reduce "facilities" provided by the government to Telkom to make it more independent.

At present, Telkom is the only telecommunication company in Indonesia that can provide adequate telecommunication services for domestic fixed lines, international calls, cellular and code division multiply access (CDMA).

The company had a long-standing monopoly on the domestic fixed line facility before the government scrapped it and allowed PT Indosat to enter the business last year.