Resources to lead RI's non-oil export drive: Hartarto

JAKARTA (JP): Indonesia's resource-based industries will remain the backbone of the country's non-oil exports in years to come, a senior minister said.

Speaking at the Atma Jaya Catholic University's graduation ceremony yesterday, Coordinating Minister for Production and Distribution Hartarto said future foreign exchange earners would still be wood-based, agriculture-based and mining-based industries.

"They are not assembling industries as we might suspect. They have reached a high level of added value," Hartarto said.

He acknowledged that a number of the country's industries are still in their assembling stage, such as the automotive industry, which drains the country's foreign exchange reserves.

However, he added, Indonesia is not relying on such assembling industries to earn foreign exchange. The country is relying more on industries with comparative advantages.

Indonesia's non-oil exports rose by 15.1 percent to $34.9 billion last year from $30.3 billion in 1994, while gas and oil exports increased by 7.9 percent to $10.4 billion from $9.7 billion. The overall exports, therefore, grew by 13.4 percent to $45.4 billion last year from $40 billion a year earlier.

The largest contributors to last year's non-oil exports included textiles and textile products with $6.2 billion in revenues, wood products with $4.99 billion, electronic and electricity equipment with $2.8 billion, processed rubber with $2.2 billion, edible oils with $1.06 billion, mineral products with $1.8 billion, and paper and paper products with $1.01 billion.

Hartarto noted that the textile and textile-related industry will remain the main earner of foreign exchange in the future owing to the abundance of raw materials, especially for synthetic textiles, and its advanced technology.

The government, he said, would continue to attract more investment in such resource-based industries to strengthen the country's exports.

In addition to the resource-based industries, Hartarto said, the government is also encouraging investment in high-tech industries, especially those which can save the country's foreign exchange reserves and if possible contribute foreign exchange. Such industries include the capital goods, chemical and electronics industries.

To make the country's industries more competitive, the government will gradually lower import tariffs on industrial products to between zero and 5 percent.

"Experience shows that the adoption of zero to five percent tariffs can make the unprotected industry more resilient," Hartarto said.

He noted that the government will continue to provide "infrastructure" to support exports. This includes the creation of a conducive business climate and a healthy market mechanism, which is free from monopoly and oligopoly, as well as the creation of an extensive export marketing network abroad.

"Having such an extensive marketing network is very important to catch the market. Without such a network, we will continue to be a loser even though our products are competitive," Hartarto warned.

To beat the competition in the global market, he added, Indonesia should also take into account its strategic alliances in the Asia Pacific Economic Cooperation forum, the Asia-Europe forum and also the Association of the Southeast Asian Nations.

"Those alliances can benefit Indonesia, especially in terms of market openings, investment and technology sourcing as well as of getting acquainted with our competitors," he said. (rid)