RI faces competition from Asian countries

RI faces competition from Asian countries

JAKARTA (JP): A report from the United Nations Industrial
Development Organization (UNIDO) said the Indonesian
manufacturing sector was facing increased competition from other
Asian countries, despite the brisk performance of its exports.

Asif Hasnain, the UNIDO representative to Indonesia, said on
Wednesday that despite strong overall export performance,
Indonesia was very dependent on imported production components.

"It is absolutely imperative that Indonesia take steps now to
improve its international competitiveness in the manufacturing
sector," he said at a media conference, which also was attended
by the vice chairman of the Indonesian Chamber of Commerce and
Industry, Fadel Muhammad.

Shafiq Dhanani, team leader of the UNIDO/UNDP project that
produced the report, said the declining competitiveness was a
result of the emergence of new competition for the labor-
intensive exports that Indonesia had dominated, and competition
on the domestic market from lower-cost producers like China and
India.

He said that to regain competitiveness and reduce costs it was
essential for Indonesian manufacturers to produce more components
locally and cost-effectively.

"Even before the crisis, Indonesian manufacturers were
beginning to face a more difficult environment due to
globalization," Dhanani said.

Indonesia's competitiveness in textiles, garments and footwear
declined in the second half of the 1990s compared to other
countries in the Southeast and South Asian regions, Hasnain said.

Following the 1997 financial crisis, the drastic devaluation
of the rupiah did not succeed in stimulating non-oil manufactured
exports, Hasnain said.

"The now much lower labor costs in dollar terms have also
failed to restore Indonesia's competitiveness," he added.

Hasnain called for the Indonesian manufacturing sector to
adopt a seven-point transformation agenda, supported by a white
paper on competitiveness in manufacturing. (tnt)