RI capital goods sector needs Malaysian investment
JAKARTA (JP): State Minister of National Development Planning Ginandjar Kartasasmita invited Malaysian firms yesterday to increase investment in the Indonesian capital goods industry.
The minister said the industry was promising for investors.
"Manufacturing will increase from a quarter of GDP (gross domestic product) to a third and be increasingly dominated by heavy industry, machinery and increasingly skill-intensive light industry sectors," he said in a one-day Malaysia-Indonesia Partnership forum here.
He said Indonesia, with solid macroeconomic management and increased involvement in the world and regional economy, would maintain an annual growth of about 7 percent in the next 20 years, supported by increasing production in capital goods.
Iman Taufik, a vice chairman of the Indonesian Chamber of Commerce and Industry, acknowledged that Indonesia still suffered a deficit of US$15.2 billion in its international trade of capital goods -- including automotive products and electronics -- in 1995 even though it gained a surplus in its total trade.
According to the Central Bureau of Statistics, Indonesia's exports reached $45.4 billion in 1995, while its imports were recorded at $40.6 billion, thereby resulting in a trade surplus of $4.8 billion.
Iman said the country's exports of oil and gas, plywood, pulp and paper, natural rubber and palm oil products were the main contributors to the trade surplus.
"Malaysian business communities are therefore invited to strengthen cooperation in the capital goods industry in Indonesia," he said.
According to Malaysian Industrial Development Authority chairman Tan Sri Zainal Abidin Sulong, Malaysia's industrial activities had moved toward the industrial sectors with high technology.
"Malaysia's business sector is more capital intensive rather than labor intensive," he said, adding there were opportunities for both countries to cooperate in the capital goods industry.
Based on data, between January and November 1996, Malaysian investors were committed to investing in 145 projects worth $3.89 billion in various sectors, such as telecommunications, financial services, agribusiness, manufacturing, property and infrastructure development.
According to Iman, who is also president director of PT Gunanusa Utama Fabricators, the Indonesian government is currently planning to strengthen the domestic capital goods industry through the promotion of joint ventures with foreign companies as well as developing human resources and development.
He said there were currently around 750 Indonesian companies producing machinery, equipment and spare parts with total installed capacity of about 400,000 tons annually. In addition, 37 enterprises were engaged in providing engineering services.
He also said Indonesia would need a total investment of $200 billion for the development of infrastructure, $50 billion in the oil and gas sector and $450 billion in non-oil industries to maintain an annual economic growth of 7 percent in the coming 10 years.
Meanwhile, chairman of Lippo group James T. Riyadi and chairman of PT Gemala Group Sofyan Wanandi said yesterday that opportunities were plentiful for Indonesian and Malaysian businesspeople to form partnerships but both governments were expected to introduce more supportive rulings.
They said businesspeople of both countries needed to seek more cooperation as neighbors of the same culture.
Both countries could complement each other in many sectors. Malaysia, which lacks manpower, could relocate its labor- intensive industries to Indonesia which has plentiful human resources.
Indonesia, meanwhile, could benefit from Malaysia's developed financial sector.
"The chances are big. But some government regulations don't seem supportive," said James.
James criticized the Malaysian government for its policy to bar foreign investors from investing in the financial sector -- including in banks, securities houses and life insurance -- while Indonesia has allowed foreign investment in that sector. (10/jsk)