Parts industry must improve efficiency
Sari P. Setiogi, The Jakarta Post, Jakarta
Indonesia's automotive parts industry needs to boost its efficiency and productivity to be able to support the fast- growing domestic car market and obtain wider access to the export market, according to industry experts.
"Efficiency and productivity should be improved to gain more access to the export market," said Djangkep Budhi Santoso, who is in charge of product and technology development at auto component maker PT Astra Otopart.
He added that the continuation of product development and maintenance of good quality were equally important.
He was speaking at an industry forum earlier this week.
Development of the country's automotive components industry has been lagging behind that in the car manufacturing industry, a situation seen as one of the stumbling blocks to developing a strong local car industry as in other neighboring countries.
According to data from the Association of Indonesian Automotive Manufacturers (Gaikindo), the country's automotive industry, which invests around US$7 billion per year, produces some 750,000 four-wheeled vehicles, 3 million motorcycles, 6,000 buses and 20,000 minibuses annually.
However, in the components industry, there are only around 200 companies, including those engaged in making motorcycle components. In comparison, Thailand has some 1,500 auto part companies.
The government has also been pushing the components industry to export more products amid the current trade liberalization drive.
"The opportunity (for automotive component exports) out there is very promising, including the coveted U.S. market," said Director General of Metal, Machinery and Electronics Industries Subagyo.
But of the 200 automotive part companies, fewer than 40 percent are ready for the export market, Subagyo said.
The market value of the country's auto components production in 2002 reached $14.1 billion, of which only $629 million went to the export market.
Director General of Small and Medium Enterprises at the Ministry of Industry and Trade Aang Tjahajadi said that since many of the local component makers were small-scale operations, they had been unable invest in the latest technology and strengthen their human resources capabilities.
"In the global market, component models change very rapidly. For small businesses, it is somehow hard for them to keep updated," said Aang.
He said consequently it was difficult for them to compete in the international market.
Indonesian Component Industry Structure
----------------------------------------------------- Two-wheeled engine 7 companies Body parts
Axle, brake, clutch, transmission, 11 companies steering, shock absorber
Pressed parts, glass, radiator, 182 companies mufflers, electricals, rubber & plastic, casting
Total 200 companies ----------------------------------------------------- Source: Gaikindo