'If our neighbors take our market, we will lose national pride'
'If our neighbors take our market, we will lose national pride'
The Jakarta Post/Jakarta
Local electronics producers claim that 50 percent of the
electronic goods traded in Indonesia are illegally brought into
the country. This situation has hampered domestic growth and
discouraged new investment. The Indonesian Chamber of Commerce
and Industry's (Kadin) vice chairman for industry, technology and
maritime affairs, Rachmat Gobel discussed the situation in a
recent meeting with The Jakarta Post. The following are excerpts
of his presentation:
In view of our domestic market potential, we must be able to
establish a strong electronics industry, which not only produces
end products but also components.
As a matter of fact, the component industry is supporting not
only electronics, but also the automotive sector, which also
needs electronic parts.
The development of both industries would also encourage the
development of the plastics industry, which contributes a lot to
the making of electronic and automotive products.
In short, these industries are interconnected, but the most
important of all is that they are all labor-intensive.
With 220 million people, our domestic market is big enough to
support the development of the electronics industry, not to
mention the regional and international markets.
Electronic goods are the country's second largest non-oil and
gas exports after textiles and garments. Their exports reached
US$7.05 billion last year.
However, the figure is a drop in the bucket compared to the
exports from the Philippines and Thailand. Electronics exports
from each of those countries reached at least $25 billion last
year.
Indonesia could emulate them by establishing a strong base in
the 'low-tech' electronic sector with the domestic market as the
main support. The industry will first supply the domestic market,
before exporting their products.
Consumer electronic products such as conventional color
televisions, refrigerators, air conditioners and washing machines
are now considered low tech electronics.
However, the growth of the local low-tech industry has been
hampered by the rampant smuggling of electronic goods, as 50
percent of the electronics traded in the country are smuggled
products.
Without domestic market support, it is difficult for us to
develop a strong low tech industry, let alone moving to the
"high-tech" sector.
The Indonesian Chamber of Commerce and Industry (Kadin) has
submitted to the government a roadmap describing all problems
confronting the local industries -- problems that the government
needs to immediately solve in order to boost the private sector
and to attract fresh investment, which is badly needed to create
jobs.
Among the problems are the rampant smuggling, unfavorable tax
policies, unattractive labor laws and the lack of infrastructure.
If the government is able to implement 50 percent of the
recommendations spelled out in the roadmap, I believe there will
be fresh investment of up to $2 billion in the electronics
industry alone within the next five years.
The next step that the government needs to take is to
formulate its "target, vision and mission" for the domestic
electronics sector for the next five years, and the next 10
years.
The government needs to formulate a five-year plan for itself,
and the 10-year program for us to anticipate the ongoing
liberalization under the World Trade Organization.
Without a broad overall understanding of where our industry is
heading, our domestic market will be easy pickings for our
neighboring countries.
If that happens, we will lose our national pride.
A similar situation also occurs in other industries, such as
the tourism, or our own batik industry.
Take for example, Malaysia; the new Prime Minister (Abdullah
Badawi) and his wife want to register a patent for Malaysian
Batik.
If Malaysia succeeds in registering a patent for the word
"batik", we might have to pay royalties to Malaysia when we
export our own homemade batik.
Recently, a tourism association leader told me that they had
to request the Japanese government's permission to use the song
"Bengawan Solo" in a tourism advertisement. The patent for the
song is held by Japan.
I've heard a similar story concerning our jamu (herbal drink)
industry.
The jamu industry was an original Indonesian industry. We have
an exclusive intellectual property right over jamu, which we
have inherited from our ancestors for centuries. However, one of
our neighboring countries apparently has a better plan to develop
the industry.
I heard that Malaysia had planned to hold a convention on
jamu, but fortunately, Indonesian associations rejected the idea
due to worries that Malaysia might want to own the patent rights
on all jamu.
When Brunei talks about jamu, it always mentions Malaysia
rather than Indonesia, whereas we all know where jamu actually
comes from.
Both batik and jamu, as well as other traditional Indonesian
industries absorb a huge number of workers. Sadly, however, we
are still unable to protect the intellectual property rights of
our traditional industries.
If we can't protect and develop these, how can we protect and
develop the electronics and automotive sectors, how can we shift
to the 'middle-tech' level of electronics?
This is our main concern for the next five to 10 years.
We must move fast, both the private sector and the government
must work together to build the vision of where we want to go.
We have to set a target on how to get at least closer to the
Thais and Filipinos -- electronics exports of $25 billion --
which is nearly four times more than our current export income.
I do believe that we could get close to those two countries.
The electronics industry will naturally grow, even if the
government does nothing. However, if the government implements
Kadin's roadmap, we are optimistic we can grow two to three times
faster.
Besides, the nation also needs to form a blueprint for the
development of local industries through 2010.
I believe we should prioritize natural resource-based
industries, in view of our strong base of natural resources and
large population.
If we succeed, we will become a strong nation.
However, we have first to solve the smuggling problem.
The encouraging news is that soon after President Susilo
Bambang Yudhoyono declared smuggling as the top concern of his
administration, illegally imported goods started to pile up in
ports.
This is a good example of how we can stop smuggling if we have
the will.
.TB1.80" 2.50" 3.30" 4.00" 4.70"
Domestic demand for major consumer electronic products
(in 000 unit)
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1999 2000 2001 2002 2003
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Color TVs 737 2,000 2,400 2,520 2,650
Refrigerators 547 920 1,170 1,590 1,720
Air Conditioners 85 173 270 370 520
Washing Machines 96 179 240 350 400
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Source: Electronic Marketers Club