New industrial policy centers on technology

JAKARTA (JP): The government announced on Friday it was adopting a new industrial policy that would boost the use of technology as a means to improve the nation's competitiveness.

Minister of Industry and Trade Luhut Pandjaitan said the new policy would become the government's guideline in designing future trade and industrial policies.

"It'll be a smart book that contains our grand strategy for our national industries," he told reporters at a media briefing.

Based on the policy's draft, the nation's economy would grow from an agricultural-based economy to an industrial and finally a technology-based economy.

Luhut said that with the new policy the government would have a clear direction of where the economy was heading.

To achieve this aim, he said, the government would adopt what was called the "industrial cluster concept".

The concept groups industries based on one core industry, such as the cigarette industry, which has several supporting industries like the packaging and marketing industries, that depend on the growth of the cigarette industry.

"This way, we can identify each industry down to its descendants," Luhut said.

The draft identified five categories under which potential industrial clusters could be developed: natural-resource based industries, labor intensive industries, capital intensive industries, technology intensive-based industries and policy driven-based industries.

The draft said that global competition required Indonesia to improve the competitiveness of its industries on an international level.

But Indonesia's competitiveness out of 47 countries dropped to 46 in 1999, from 40 in 1998, according to the Institute for Institutional Management Development (IIMD).

To lift its ranking, the draft said, Indonesia must improve the technology content of its export products.

According to the draft policy, most export-oriented manufacturing companies were not using modern technology in their production activities.

Based on a survey by the Organization for Economic Cooperation and Development, only 3.56 percent of Indonesia's total export volume in 1998 was based on medium and high technology.

Whereas, the World Economic Forum ranked Indonesia at number 48 out of 53 countries in applying research and development technology.

"Thereby, Indonesia can only be regarded as a follower rather than a technology leader," the draft said.

The draft further proposed the establishment of a national council of international competitiveness that would design policies related to increasing the country's competitiveness.

It also suggested a cluster working group, whose job would be to develop industrial clusters.

Luhut said that new government regulations would follow to support the policy once it was completed.

He said the government was about to finalize the policy and only needed to publicize the draft for more input.

"We just need to report to the President on the progress we've made," he said, adding that the draft only awaited the President's approval.

However, he said he would also invite associations from various industries and several universities to discuss the new national policy. (bkm)