Machinery exports sign of industry relocation
Abdul Khalik, The Jakarta Post, Jakarta
Analysts warned on Wednesday that the increase in Indonesian machinery exports as reported by the Central Statistics Agency (BPS) could be due to relocation to other countries by foreign factories rather than genuine export growth.
The chairman of the National Economic Recovery Committee (KPEN) Sofjan Wanandi said that there was a strong possibility that BPS recorded all machinery sent abroad as exports.
"There are no signs of an increase in machinery production in Indonesia, especially before and during the general election campaign. Businesspeople are still waiting for the result," said Sofjan, who is the owner of several companies in various business sectors.
Sofjan told The Jakarta Post that many foreign companies had relocated their factories to Vietnam and China to seek lower production costs and a better business climate.
During the past couple of years, a number of foreign ventures have decided to stop their operations here due to the worsening investment climate.
Johnson and Johnson, which manufactured various types of baby and skin care products, closed its local operation on March 31, 2001.
In 2002, PT Indolin Utama Garment, the producer of various brands of trousers, and PT Dosan Indonesia, the producer of Nike shoes, stopped their production activities.
PT Sony Electronic Indonesia, a subsidiary of the giant Sony Corp. pulled out of Indonesia in 2003, leaving around 1,100 workers out of work. The company said that it relocated its business to Malaysia because that country offer a better investment climate than Indonesia.
BPS reported earlier that Indonesia managed to book US$646.3 million in exports of machinery and electrical equipment in February, up around 20 percent from $448 million in January.
BPS also said that export of such commodities experienced an increase of $94.7 million to $1,095 million in the January- February period of this year compared to the same period last year.
Aside from this, BPS also reported a $78.5 million increase in the export of mechanical equipment in February, up from $470.6 million in January.
An economist from the University of Indonesia, M. Ikhsan, said that the high increase in machinery export raised suspicions that many more foreign companies had pulled out of Indonesia and taken their machinery with them.
"We must be careful in analyzing the BPS report because it could show that more and more foreign companies have pulled out of Indonesia. Every commodity sent out of Indonesia is recorded by BPS as an export," he said.
Another analyst from the Institute for Development, Economics and Finance (Indef), Bustanul Arifin, concurred.
"If the exports are registered outside Jakarta or other main ports then we can say that the possibility of factory relocations is even higher because there is no detailed examination of goods at such ports," Bustanul told The Jakarta Post.
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