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.