RI's industrialization faces serious obstacles

RI's industrialization faces serious obstacles

JAKARTA (JP): Indonesia's industrialization process is facing
serious obstacles due to uncertainties in cost fluctuations,
machine quality variations, delayed delivery time, poor after-
sales services and lack of trained operators, an analyst said.

"The obstacles are rooted in the fact that more than 90
percent of machines and precision dies and molds are still being
imported," Miranda S. Goeltom, a deputy assistant to the
coordinating minister of economic and finance, said over the
weekend.

Moreover, she said, the main input for machinery production,
such as steel in a variety of grades, is not readily available in
Indonesia and must be imported from wholesalers in Singapore.

Speaking at a seminar on Indonesia and the ASEAN Free Trade
Area (AFTA), which was organized by the Indonesia Forum
Foundation, Miranda said that Indonesia should develop its
machinery industry to facilitate the industrialization process,
so that it can gain much from the Afta agreement, due to be
implemented in 2003.

"Indonesia can certainly gain much from Afta if it can
increase its manufactured exports to the ASEAN region, especially
technology and capital intensive goods such as electrical and
electronic equipment and machinery," she said.

The Association of Southeast Asian Nations (ASEAN) groups
Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand
and Vietnam.

But, Miranda said, the problems of expensive research and
development, high interest rates, lack of subcontracting links
and good infrastructure, limited mastery in manufacturing
technology, serious backwardness in product technology and poor
quality of human resources have hampered the development of
Indonesia's machinery industry.

He pointed out that expensive research and development has
hampered the intention to develop design and engineering of
machine tools and machinery products, so that Indonesian
producers are still in the stage of learning and are inefficient.

"In fact, Indonesian producers cannot compete with China,
India and Taiwan, which can usually offer cheaper and more
reliable products," she said.

"Research and development and the ability to innovate are key
factors in enhancing competitiveness in the machinery sector,"
she said.

Miranda said that lending interest rates of about 20 percent
per annum have put producers in a difficult position to fund
their industries.

"The lack of good infrastructure, such as roads and ports,
make it difficult for the industry to meet the on-time delivery
requirements of the multisourcing mode of procurement in the
increasingly competitive market," she said. (13)