Manufacturing sector shows signs of recovery

JAKARTA (JP): The country's manufacturing sector is showing signs of recovery, with many companies beginning to intensify production, Minister of Trade and Industry Rahardi Ramelan said on Thursday.

He said production capacity utilization in the country's manufacturing sectors reached 61 percent in the first quarter of the year, up from 55 percent in the seven-month period of June- December 1998.

"However, compared to the pre-crisis period, the productivity level is still low," Rahardi said in a written speech at a seminar on export opportunities read out by Director General of Foreign Trade Djoko Mulyono.

The production capacity utilization level of the country's manufacturing sector reached 69 percent in 1996, Rahardi said.

He said the production capacity utilization level of the metal, machineries and electronics and several other industries rose to 58 percent in the first quarter of the year, from 48 percent in the seven-month period from June to December last year.

In 1996, the production capacity utilization level in metal, machineries, electronics and various other industries reached 71 percent, he said.

He said production activities in the chemical, agronomy and forest products industries also improved during the first quarter of the year, with a production capacity utilization of 56 percent, up from an average utilization of 2.9 percent throughout 1998.

Rahardi said the intensification of productivity in the country's industrial sector has paralleled the signs of recovery in the country's economy this year.

Indications of the economic recovery include the decline of inflation to around 3.08 percent in the January to May period and the recent strengthening of the rupiah to around Rp 7,000 per U.S. dollar, he said.

He said the increasing productivity of the industrial sectors, however, would not necessarily affect the country's exports.

Rahardi said export value have decreased by 8.6 percent to reach $48.85 billion in 1998 from $53.44 billion in 1997.

"The value further dropped by 11.81 percent for the period of January to June this year," he said.

Djoko said the drop was due to, among other things, tighter competition with other exporting countries that produce similar products, the low quality of many Indonesian products and the weakening demand in some markets.

He said Indonesian exporters should improve the quality and competitiveness of their products in order to beat other products offered by other countries.

"Our products are very easy to be imitated or reproduced by other countries because they are so lacking in technology," he said.

He said some 399 shipments of Indonesian products were denied entry into the United States from January to May this year because they had failed to meet international quality standards.

Djoko said that to boost exports, the government would continue to simplify export procedures, provide incentives for exporters and promote Indonesian products to overseas markets.

He added that exporters were encouraged to find new markets other than the current 24 countries that buy Indonesian goods. (cst)