The Indonesian Chamber of Commerce and Industry (Kadin) reported Wednesday that the growth of the manufacturing industry in the first half of the year was shackled by high borrowing cost and high dependency over imports.
The latest data from the Central Statistics Agency (BPS) shows the manufacturing industry grew by 4.1 percent in the first semester compared to the same period last year.
The figure was significantly lower than in the first semester of 2007, which saw a 5.4 percent growth compared to the first semester of 2006.
The BPS also reported that the growth of foods, drinks and tobacco industries in the first six months of this year fell by 2.36 percent while textile, leather goods and footwear industry fell by 3.43 percent, cement and non-metal mining industry contracted by 0.48 percent while a group of other industries dropped by 4.26 percent.
Kadin Chief of Product Standardization Aziz Pane blamed low bank lending as the main cause of the sluggish growth.
"This should be the government's main concern," he said as quoted by Tempointeraktif.com.
The central bank raised its benchmark rate a fourth consecutive time this year to nine percent on August 5. Banks usually maintain their lending rates for corporate financing by four to five percent above the benchmark rate.
To make matter worst, he said, the automotive, metal and electronics industries were extremely dependent over imported manufacturing components, which amount to 60 to 70 percent of total production material expenditures.
"We urge the government to focus on developing the component industry to support the industry structure and provide jobs," said Aziz. (and)
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