High added value key to competition

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)