Nation urged to focus on four top industries

Nation urged to focus on four top industries

Adianto P. Simamora, The Jakarta Post, Jakarta

Minister of Industry and Trade Rini M. Soewandi urged the
nation to focus on revitalizing four industries -- textiles,
electronics, footwear, pulp and paper -- as part of efforts to
rejuvenate the country's waning manufacturing sector.

The appeal is contained in a draft blueprint for the
revitalization of the country's industrial sector for the period
2002 to 2004 being proposed by the ministry to the Cabinet for
approval.

"The recovery of these four industries is expected to create
350,000 new jobs and avoid mass layoffs," said the draft national
program for revitalizing industries.

The document, which was made available to The Jakarta Post
over the weekend, was presented by Rini during a Cabinet meeting
on Feb. 14 and a meeting with the Financial Sector Policy
Committee (FSPC) last Tuesday. FSPC comprises ministers in charge
of economic affairs.

The country's textile sector currently employs 250,000, the
electronic sector 1.19 million, the footwear industry 389,000 and
pulp and paper 100,000.

Aside from the four sectors, Rini also proposed to develop
seven other industries, which have the potential to create a lot
of jobs, namely leather, fishing, crude palm oil, fertilizer and
agricultural machinery, food, software, handicrafts and jewelry.

It said that the development of these seven industries would
absorb about 809,000 new workers.

The revitalizing of the four sectors and the development of
the seven industries would also boost the country's exports to
US$42.2 billion this year from $39.7 billion last year, the
document said.

Millions of workers employed in the manufacturing sector have
been laid off due to the economic crisis, which began in the
middle of 1997.

The current government has made job creation one of its main
economic agendas, but it has been criticized for lacking clear
aims on how to reach their objectives.

More than four years since the crisis hit the country, the
country's industrial sector remains in the doldrums because of
external factors and internal problems.

The external factors include the global economic slowdown,
particularly in the country's main export destinations -- the
United States, Japan and Europe -- and also the tighter global
competition, both in marketing products and attracting new
investors.

The domestic problems confronting the industries include poor
security measures and law enforcement, a high cost economy, labor
issues, as well as the lack of financing.

Rini said in the document that the ministry could not go alone
in solving the problems but should go hand-in-hand with other
ministries and local governments.

"The joint commitment from various ministries and local
governments is necessary," the document said.

As far as financing is concerned, the ministry proposed to set
up the Indonesian Recovery Fund (IRF) Asset Management to quickly
restructure debts owed by the sectors and another agency, the IRF
Venture Capital, to finance their expansion.

Many sectors are now unable to obtain credit from banks to
finance expansion plans due to their debts to the Indonesian Bank
Restructuring Agency (IBRA).

Under the ministry's proposal, the debts should be transferred
from IBRA to the IRF Asset Management, which will restructure the
debt based on commercial terms.

"Canadian insurance firm Manulife has showed a serious
interest in supporting the IRF Asset Management," the document
said.

With regards the establishment of IRF Venture Capital, several
domestic and foreign banks have indicated they are ready to
provide funds for the agency, according to the document.

The ministry also warns in the document of the damage caused
to local industries by smuggling.

It said smuggled goods, which have been on the rise lately,
have rendered locally made products uncompetitive, causing
massive losses.

Curbing smuggling is one of the main agendas to the program to
revitalize the country's industries, it said.

The government announced on Thursday the establishment of a
team to tackle the smuggling trade.

Director General of the Customs and Excise office Permana
Agung said that the members of the team would come from Customs,
the National Police and relevant state agencies.