Leaping into high tech

Leaping into high tech

Indonesia, a nation with a per capita income of less than
$700, leaps into high technology today when President Soeharto,
currently chairman of the 18-member APEC and 108-country Non-
Aligned Movement, unveils Indonesia's first domestically designed
and produced medium-range aircraft in coincidence with Heroes
Day.

The rolling out ceremony at the state-owned PT Industri
Pesawat Terbang Nusantara (IPTN) in Bandung, West Java, should be
a joyful moment for Indonesia's Germany-educated aerospace
engineer, most prominent futurologist and tireless advocate of
high-value added products, B. J. Habibie.

The completion of the prototype of the 70-seat N-250, billed
to be the world's first fly-by-wire, electronically-controlled
propeller-driven aircraft, should serve as a psychological boon
to the nation which will celebrate the 50th anniversary of its
independence next August. A sense of national pride is sure to
emerge with this aircraft, especially in these days when leaders
of the economic powerhouses, Japan and the United States, are
gathering here for the APEC meeting.

The critics and doubters, including development economists at
the World Bank, may find it difficult to believe that a country,
which is not yet capable of fully manufacturing even a motorcycle
or a car, could make such a high-tech product as an aircraft,
whose commercial production is still dominated by the highly
developed nations. Critics also may view the production of the
aircraft as an example of how a country could set priorities in
its technological development and resource allocations so
erroneously.

The fact is that the prototype has been completed, the flying
tests will start next year and preparations for mass production
are fully underway.

We are confident that Habibie, who is also the state minister
for research and technology and chairman of 10 state companies,
as well as his engineers, fully realize that the rolling out of
the prototype is simply the beginning of a monumental task --
how to prevent the pride of the nation from turning into a
billion-dollar bubble.

Obviously, the first challenge is that the aircraft has yet to
obtain international certification from the United States'
Federal Aviation Administration to make it viable for commercial
production. Habibie seems to be fully aware of this requirement,
as can be seen from his thorough preparations for setting up a
joint venture in the U.S. to manufacture the N-250 plane.

A manufacturing plant in the U.S. will simultaneously cope
with two problems: the process of certification and the
solidifying of a positive image of Indonesia. The kind of image
potential buyers have of a country is quite crucial for selling a
high-tech product on the international market. Right now,
Indonesia is still perceived mainly as a low-cost manufacturer of
light industrial products.

Even once it is certified, challenges will remain. The
aircraft will have to compete with similar planes made by already
well-known producers, such as British Aerospace, Aerospatiale and
NV Fokker. We are all aware that selling such high-tech products
as the N-250 plane with a price tag of more than $13.5 million a
unit requires much more than high quality and an airworthiness
certificate.

In fact, credit financing is often more crucial. Even such a
giant aircraft manufacturer as Boeing Co. depends on the U.S.
Eximbank export financing facility to push up its sales. We are
afraid, IPTN's marketing may be hindered if the company cannot
offer credit financing, especially as Habibie has estimated that
at least 260 of the N-250s will have to be sold to make the
break-even point.

Therefore, if we all feel proud of the N-250, we should join
hands in promoting its marketing. The central bank, for example,
should begin studying the possibility of extending export credit
facilities to potential buyers. Private companies experienced in
arranging counter-trade deals with other developing countries
should include the aircraft in their trading activities.

Such cooperation, we think, is necessary to ensure that the
government's investment in the N-250 aircraft's development,
already amounting to $650 million, can eventually be recouped,
otherwise what is now a monument of our national pride could
degenerate into a national embarrassment.