Split of industry and trade ministry seen as 'positive'

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.