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)