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.