Industrial sector still faces many problems

JAKARTA (JP): Indonesia's industrial sector still faces many problems despite its rapid growth over the last few years, an academic said yesterday.

Center for Information and Development Studies' researcher, Didin S. Damanhuri, said if the problems were not resolved now, new and more complicated ones would emerge.

Didin is also the director of the Bogor Agricultural University's information resources agency.

"There are at least six problems the country's industrial sector still faces," he was quoted by Antara as saying.

These problems include the concentration of the economy in the hands of a few people and the many monopolies.

Didin said the other problems were economic domination by a group of rent-seekers, the weak relationship between companies within an industry and the small number of middle-level industries which caused weak industrial structures.

He said state companies were also unable to supply industries with raw and semi-processed materials and failed to encourage the use of technology.

Another problem was that foreign investors chose to do business in Indonesia because of its huge domestic market and not as an export base.

Didin said deregulation over the past decade had not changed Indonesia's industrial structure.

"The added value enjoyed by industries has not managed to affect small and medium industries. So far it can only be enjoyed by big industries," he said.

Didin was confident Indonesia's big industries, with their huge capital, advanced technology and wide market access, were prepared to compete in the free market era.

"Although there are signs that the industrial sector is currently not efficient and professional enough, it won't be too difficult for them to adapt to the rules of a free market," he said.

But small and medium businesses, home industries and agriculture-based industries would have a tough time entering the free market era, he said.

He said special attention should be given to small and medium business because their problems often had "unexpected economic and political implications" because they operated close to the grass roots level. (pwn)