High added value key to competition
JAKARTA (JP): Indonesia has to systematically improve its industrial technology to enable it to compete with its main rivals, China and India, in the world markets, says an executive of a noted multinational company.
Kenneth Courtis, the vice president of the Tokyo-based Deutsche Bank Capital Market (Asia) Ltd., said here yesterday that turning to high added value products is the key factor to enable Indonesia to compete with those two countries.
"Indonesia has to go that way otherwise it will lose its export markets," he told The Jakarta Post during a break of a one-day symposium on investment in the Asian region.
Courtis was one of the speakers at the symposium held to commemorate the 25th anniversary of Deutsche Bank's Jakarta branch. The other speakers included Norbert Walter, the chief economist of the Deutsche Bank Group, Don Stammer, the chief economist of Bain and Company Limited, Hadi Soesastro, an executive of the Center for Strategic and International Studies, and Bacelius Ruru, the chairman of the Capital Market Supervisory Agency (Bapepam).
Courtis praised the Indonesian government's moves to further open up the country's economy, which he said would stimulate production efficiency nationwide.
He, however, considered that the opening-up of the economy is not enough without further deepening the scale of the country's industrial technology.
Relying on labor intensive industries, he said, will put Indonesia on the losing side as its main competitors such as China and India have stronger and cheaper labor forces.
"At present, Indonesia's products might have the same competitive edges with those of China or India but in the long run Indonesia could become a loser as its labor force would be more expensive," he said.
Change
The key factor to enable Indonesia to compete in the international markets is to change the scale of the technology of its export-oriented industries, he said.
"Indonesia has to, therefore, gradually switch its industries to those producing higher added value products," Courtis said.
Soesastro acknowledged that in certain sectors, China has stronger competitive edges.
"But don't overestimate that country, which is now undergoing a major structural change both politically and economically," he said, adding that the change could not only affect that country's export drive but also its overall economy.
He said that a number of Indonesia's export products remain more competitive than those of China.
Unlike Courtis, Soesastro sees the dismantling of the government's protection on agriculture-based products as the crucial factor in further expanding Indonesia's export markets.
He said that Indonesian agricultural products would be more competitive than those of any Asian countries if the government's protection is dismantled.
"Our strong competitive edge actually lays in the agricultural sector but as most important farm products are protected, we cannot tap the market's potentials," he said.
Indonesia's export earnings from agricultural products are less than one-third of those of Thailand and less than one-fifth of Singapore's, he said.
"The low export figures of Indonesia's agricultural products indicates there is something wrong in the management of this sector," he said, adding that Indonesia, given its more abundant natural resources, should have taken the lead in the farm-based industries.(hen)