Lack of standards harm electronics industry: Adhi

Zakki P. Hakim, The Jakarta Post, Jakarta

A lack of effective regulations governing the standards of electronic goods in the country is hurting the industry at a time when ASEAN is set to liberalize the sector by 2007, according to an industry leader.

The secretary-general of the Indonesian Electronic and Electrical Appliance Industries Association (Gabel), Adhi Sukmono, said this situation was primarily the result of regulations on standards being handled by two ministries: the Ministry of Industry and Trade, and the Ministry of Energy and Mineral Resources.

"There has been an argument between the two ministries on who has more authority in regulating standards on electronic products," he told The Jakarta Post on Monday.

"This has delayed the standardization of electronics," he said.

According to Government Decree No. 102/2002 on national standardization, the Ministry of Energy and Mineral Resources is authorized to regulate safety standards for electrical appliances.

However, its authorization is limited to domestic products.

The Ministry of Industry and Trade regulates the standards for all consumer products, both exported and imported, including electronic goods.

Adhi said the absence of government standards contributed to the massive inflow of cheaper imported electronic goods, hurting locally made products.

"Deindustrialization is happening," he said, referring to the closing down of some electronics manufacturers.

He said that when the government imposed standardization on electric fans in June of this year (the first time a standard was imposed on electronic goods in the country), it was deemed too late as only four domestic manufacturers had managed to survive the fierce competition with cheaper imported products (whether legally or illegally imported), particularly from China. The four were Maspion, Panasonic, Cosmos and Sekai.

The association claims that 50 percent of the electronic products traded in Indonesia are illegally brought into the country.

Adhi predicted that with the member countries of the Association of Southeast Asian Nations (ASEAN) planning to liberalize tariffs in the electronics sector in 2007, the local industry would face more difficulties as the government would be unable to control the influx of imported electronics without effective standards.

He suggested the government end the regulatory dualism on standardization.

According to Adhi, most ASEAN countries have already set up a single standardization authority, such as the Standards, Productivity and Innovation Board in Singapore, the Standards and Industrial Research Institute of Malaysia and the Thai Industrial Standards Institute.

Currently, Indonesia's exports of electronic products stand at about US$7 billion per year, the lowest among ASEAN countries. Thailand, for example, exports some $23 billion worth of electronic goods per year.