Ruling on imports of used machines queried

Ruling on imports of used machines queried

JAKARTA (JP): Local heavy equipment manufacturers called on
the government here on Wednesday to review its recent move
allowing local companies to import used machines, machine tools
and capital goods.

The association of Indonesian heavy equipment manufacturers
said here on Wednesday that the move would encourage local
companies to import used heavy equipment rather than buying new
products.

"It will affect our investment and production activities,
which are now in the recovery process," said Budhi Sayogo,
director of PT Komatsu Indonesia Tbk.

The government issued a ruling in late April allowing local
users to import a wide range of used heavy equipment, machines
and machine tools to help local industries cope with the soaring
prices of the capital goods.

The association said the ruling would certainly undermine its
members's businesses because most of the used equipment which
will be imported will compete with products manufactured at home.

"We expect the government will review the regulation so that
the impact will be minimal," said Gunawan Setiadi, the director
of PT Hitachi Construction Machinery Indonesia.

According to association members, the import facility should
be limited only to used equipment or other capital goods, which
are not being produced in Indonesia.

The producers fear that if the government maintained the
regulation, local users would switch to imported second-hand
products, which are much cheaper than new ones, Gunawan said.

The association includes 15 heavy equipment producers, such as
PT Natra Raya, PT Swadaya Harapan Nusantara, and PT United
Tractors Pandu Engineering.

The industry, which operated at only about 20 percent of their
production capacity last year due to continuing low demand, has
showed signs of recovery in the past several months on the
improvement of the country's overall economy.

The association expects that the average utilization level of
the industry's production capacity will increase to 30 percent
this year.

These products are used mainly in the mining and forestry
sectors, since the local heavy equipment industry, especially the
construction sector, was badly hit by the economic crises that
began in 1997.(07)