Govt to focus on high-tech industries for free trade

Govt to focus on high-tech industries for free trade

BANDUNG, West Java (JP): The government will focus its policy
on the development of certain high-tech industries to prepare the
country to compete in regional free trade, which will start in
2000, a senior minister said.

Speaking at the Bandung Institute of Technology, Coordinating
Minister for Production and Distribution Hartarto Sastrosoenarto
said Saturday that with a common Southeast Asian market of some
500 million people by 2000, it is feasible to develop such high-
tech industries.

"Indonesia must work hard and be able to compete with
Singapore, Malaysia, Thailand and the Philippines," Hartarto
said in his speech before the institute's senates.

Hartarto was here to accept an honorary doctoral degree from
the institute. He is the third person to receive such a degree
after Indonesia's first president Sukarno and Soetaryo Sigit, a
former director general of mines.

Indonesia, along with the other members of the Association of
Southeast Asian Nations (ASEAN) -- Brunei, Malaysia, the
Philippines, Singapore, Thailand and Vietnam -- has committed to
pursuing a freer trade in the region under the ASEAN Free Trade
Area (AFTA) agreement by 2003.

By that time, import tariffs on goods included for the free
trade in ASEAN member countries will be in the range of 0 percent
to 5 percent. However, by 2000, most of the goods, mostly
industrial goods included on the free trade list, will already be
in that range.

By the end of this century, ASEAN will have incorporated
Cambodia, Laos and Myanmar as members, bringing together a common
market of some 500 million people.

To win competition in such a free market, Hartarto said
Indonesia should from now on develop high-tech industries in
telecommunications; electronics, including semiconductors;
automation and precession machinery, including medical equipment;
advanced materials; fine chemical and pharmacy; sea, land and air
transportations; energy-supporting goods, including electricity
generation and distribution; and pollution controls, as well as
biotechnology.

He added that it is necessary for Indonesia to introduce
fiscal incentives to stimulate the development of such high-tech
industries so that they can compete in free trade. "Such high-
tech industries should be given fiscal incentives."

In a bid to boost more industrial exports, the government has
announced a new regulation regarding tax holiday incentives for
new industrial plants producing certain products.

However, up to now, the government has not announced what
kinds of industries they are. It only said that they must be
producing raw materials or intermediary materials for other
industries or working in the upstream level or producing new
products.

Hartarto explained that to win business, Indonesia should now
combine the broad based/broad spectrum industrial development
strategy with the strategy of developing leading export
commodities.

The leading export commodities are the products of the broad-
based industrial development strategy, which has been pursued by
the government for over 25 years.

The leading export commodities include textiles and textile-
related products, wood products, electronics, leather and leather
goods, steel, machinery and automotive, pulp and paper, as well
as drinks and foods and jewelry.

To maintain and even boost the competitiveness of Indonesia's
industrial export products on the international market, Hartarto
said, they must be supported by strong applied research and
development centers, including those run by private or state
institutions.

He acknowledged that the development of such applied research
centers by the private sector has been slow due to the absence of
incentives. Only recently, has the government promised fiscal
incentives to those who pursue applied research and development.

"Therefore, we must encourage certain large companies to
pursue applied research and development with the support of
fiscal incentives," Hartarto said.

As for small and medium-scaled enterprises, they are advised
to forge closer ties with applied research and development
centers owned by state institutions or universities. (rid)