Govt hails Jetro's commitment to help enhance local SMEs
Zakki P. Hakim, The Jakarta Post, Jakarta
The government intends to take full advantage of the Japan External Trade Organization's (Jetro) commitment to enhance small and medium enterprises' (SMEs) capabilities to support the manufacturing sector, a senior official says.
Coordinating Minister for the Economy Aburizal Bakrie said on Tuesday that a strong supporting industry would in turn strengthen manufacturers of automobiles, electronics and machinery, among other things.
"A strong supporting industry, for example, will eventually double exports of electronic goods from last year's US$8 billion to $16 billion," he said at the Reinventing Indonesia's Industrial Competitiveness symposium, jointly organized by Jetro and the Centre for Strategic and International Studies (CSIS).
Aburizal went on to say that Indonesia's international competitiveness was ranked 44th last year, a significant improvement as Indonesia ranked 60th in 2003.
The World Economic Forum ranked countries based on openness of trade and investment, the role of state, financial availability and infrastructure.
Later in the afternoon, Minister of Trade Mari E. Pangestu said the industrial policy would be aimed more at, "producing what we can sell, rather than selling what we can produce".
The government will determine a policy direction, but one that is not too detailed in regards specific industries as it would require the government to provide special incentives, she said.
"Being too specific would give signals to the banking sector to provide loans to certain sectors. It would become a moral hazard," she added.
However, the government will support the development of SMEs to specialize in manufacturing parts, components and machinery and to eventually be part of the global value chain.
Thus, even if the country had strong supporting industries that were attractive to foreign investors, the government would have to ensure that there was a conducive investment environment, she explained.
Jetro chairman and CEO Osamu Watanabe said Indonesia must overcome existing problems on delays in infrastructure development -- labor issues, such as steep hikes in wages that exceeded improvement of productivity, notorious corruption and other so-called "unclear costs" and weakened industrial competitiveness -- to attract fresh investment.
Jetro is committed to helping Indonesia form and implement strategies to enhance industrial competitiveness, including building up supporting industries.
Through the "Supporting Industries Promotion Plan for Indonesia", Jetro will survey Japanese manufacturers in the country to find out which parts and components they find difficult to resource locally.
"We will then offer technical guidance to local suppliers of parts and components, focusing on metalwork and other fields identified in the survey," Watanabe said.
Separately, Indonesian Chamber of Commerce and Industry (Kadin) vice chairman for industry, technology and maritime Rachmat Gobel said the country should make full use of this opportunity, otherwise it would lose out to neighboring countries.
"If we don't take advantage of this opportunity to improve our supporting industries, neighboring countries such as Malaysia, Thailand and Vietnam are more than ready to lure global manufacturers," he said.
Rank of Indonesia's Competitiveness in the World
1997: 15 out of 47 countries
1998: 31 out of 49 countries
1999: 37 out of 49 countries
2000: 47 out of 58 countries
2001: 55 out of 75 countries
2002: 58 out of 80 countries
2003: 60 out of 95 countries
Source: World Economic Forum