Wed, 16 Jun 2010

To further support the country’s electronics and information and communication technology (ICT) industry, the government plans to exempt more electronic products from the luxury tax as well as to restrict imports, Industry Minister M.S. Hidayat said Tuesday.

The minister said the tax break and protection from imported products would be part of the government’s policy of prioritizing the development of the electronics and ICT industry in the country.

“We also need to impose more mandatory industrial standards on imported products in order to protect local producers from substandard foreign products,” he said, adding that the government would also help local electronics producers to gain access to international markets.

The ministry’s director general of transportation equipment and ICT Industries (IATT), Budi Darmadi, said the government would also prioritize the development of electronics factories in a number of industrial zones to be built outside Java and Batam.

Despite the protectionist stance, Hidayat acknowledged the electronics and ICT industries were still hurt by the influx of smuggled products from a number of countries, including China.

“We can neutralize the fierce competition from imported Chinese products by cooperating with their manufacturers to set up joint ventures with local companies to produce goods for sale domestically and internationally,” he said, adding that China was still Indonesia’s biggest competitor for electronic products.

Ministry data showed the value of exports of electronic products in 2009 reached US$8.92 billion, an 11.03 percent increase from $8.03 billion in 2008, while last year’s exports of ICT products reached $3.97 billion, a 23.29 percent increase from $3.22 billion the previous year.

The government expects output from the ICT industry to reach Rp 54.39 trillion ($5.93 billion) in value this year, creating jobs for about 60,000 people. Exports from this sector are estimated to reach $4.65 billion this year.

The overall manufacturing industry grew 4.01 percent in the first quarter of this year, thanks to, among others, higher contributions from the electronics and ICT industries, Hidayat said.

The first quarter’s significant growth was supported by a 10.12 percent increase in the production of vehicles, machinery and equipment, including electronics and ICT products. (ebf)