Thu, 11 May 2000

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)