Split of industry and trade ministry seen as 'positive'
Zakki P. Hakim, The Jakarta Post, Jakarta
Long before president-elect Susilo Bambang Yudhoyono revealed his plan to divide the Ministry of Industry and Trade into two ministries, manufacturing players had been complaining about the outgoing government's lack of attention to the industry sector.
Critics have said that Minister of Industry and Trade Rini M.S. Soewandi had focused mostly on trade issues rather than on efforts to resolve problems faced by the troubled manufacturing industry.
The sector's contributions to gross domestic product declined from 12 percent in 1996 to an average 3.9 percent since the late- 1997 financial and economic crises.
While acknowledging the issue, Rini had maintained that placing the two ministries under one roof would be more effective to ensure the streamlining of international trade policies and industrial policies, given that a large part of the country's non-oil and gas exports came from the manufacturing sector.
However, proponents of Susilo's plan said as global trade issues became more complicated and as problems faced by local industries became equally complex, it was high time that two ministries were established to deal with the different issues.
"It is a good thing that SBY realizes that trade policy, especially international trade, needs undivided attention," Thomas Darmawan of the Indonesian Chamber of Commerce and Industry (Kadin) told The Jakarta Post on Monday, referring to Susilo by his popular nickname.
The government expects the export sector to increase to US$50 billion this year, from $47.41 billion last year. The incoming SBY administration aims to boost exports further with an aim to accelerate economic growth to over 6 percent next year, from an estimated 4.8 percent this year.
The industry and trade ministries were merged by former president Soeharto into a single ministry in 1995 -- claimed to be undertaken in anticipation of global trade liberalization following the establishment of the World Trade Organization.
The government said it would be more efficient to have one authority for negotiating international trade policies and developing domestic industries.
Then-industry minister Tunky Ariwibowo was appointed the head of the new ministry of industry and trade, while outspoken trade minister Satrio "Billy" Budiarjo Joedono was left jobless until he assumed the ambassadorial post in Paris -- a post that was commonly given to senior officials who had moved against Soeharto's interests.
Billy is now chairman of the Supreme Audit Agency.
Analysts, however, have said that the crucial issue was not about separating or merging the two ministries, but improving the domestic investment and business climates to attract new investors and boost the ailing manufacturing sector.
Among the most pressing problems that SBY needed to tackle immediately were cutting red tape and reviewing unfavorable regulations on labor, tax and customs, they said.
Meanwhile, chairman of the Association of Indonesian Retailers (Aprindo) Handoko Santosa said the separation of the two ministries was unnecessary, because of the risk that the two ministers might have different policies.
He quickly acknowledged, however, that such a problem may not emerge if an effective and efficient Coordinating Minister for the Economy was in office.
Handoko also wondered whether the separation would slow the new government's performance during its first 100 days, as time and funds would be wasted in recruiting new staff and moving house before the ministries could function effectively.