Non-oil export plan has hurdles

Non-oil export plan has hurdles

JAKARTA (JP): Reaching the non-oil export target of US$36.2
billion for the 1995-96 fiscal year, an increase of 16 percent
from the current fiscal year, will be a serious challenge, Trade
Minister Satrio B. Joedono said yesterday.

Joedono told a gathering with journalists that Indonesia is
now facing keener competition from other suppliers of cheap
products such as China, India and Vietnam.

"Those countries are able to sell products cheaper as their
labor costs are lower than ours ," Joedono said.

He foresaw keener competition in such labor-intensive
industries as textiles, garments, shoes, bicycles and plywood.

During the January-August period of last year, exports of
textiles and garments declined by 8.8 percent to $3.84 billion,
while a level of $7 billion was expected in 1994.

Plywood exports, the second largest foreign exchange earner,
also declined around nine percent.

"There is no other way to win amidst fiercer competition
except for reducing our costs through higher efficiency," Joedono
suggested.

To help increase the competitiveness of Indonesian products,
he promised that the government would introduce another package
of deregulation measures this year to abolish "high costs outside
the factory," including red tape and illegal levies.

"Deregulation in the trading sector this year will focus on
the further simplification of procedures and licenses," he
pointed out.

The minister said stronger economic recoveries in major
developed countries will increase the international market demand
for products from developing nations.

"But we don't expect higher prices due to keener international
market competition. Indonesian exporters therefore should
diversify into higher quality and higher value-added products to
fetch higher prices," he said.

He said the government is encouraging businesses to develop
marketing networks overseas by acquiring existing distribution
networks in a bid to promote Indonesian products.

"Such an investment should not be seen as capital flight
because it is meant to enlarge our market access," Joedono said.

Joedono also charted out Indonesia's challenge under the new
multilateral trading arrangements outlined by APEC and the World
Trade Organization.

"All of this requires us to adjust business conditions and
trade competition here to that which prevails in other
countries," he cautioned.

In preparation to meet those challenges, the government will
submit two bills regarding unfair market competition and consumer
protection to the House of Representatives sometime during the
next fiscal year, Joedono added.

Replying to questions about the protection of domestic
upstream industries, the minister explained that under new WTO
rules, Indonesia, as a developing country, is still allowed to
protect its industries with import tariffs of up to 40 percent.

But as to whether "we will use that opportunity or not will
depend on the impact of such protection on our downstream
industries," he argued.

Tariff protection has become the subject of heated debate
during these last few months since PT Chandra Asri Petrochemical
Center, the country's first olefin plant, asked for government
protection of up to 40 percent tariffs against imports.

Commenting on cement prices, which rose steeply last year,
Joedono hinted that domestic prices should be allowed to move
within the international price range, otherwise investors will
not be interested in building new cement plants.

Industry Minister Tunky Ariwobowo said recently that Indonesia
would import five million tons of cement this year to cover the
domestic deficit, caused by the wide gap between the demand and
supply capacity.(rid)