The Federation of
Indonesian Chemical Industry [FIKI] felt the need for Government support to
businessplayers the lessen dependency on imported components. The support was
also needed to keep chemical producers from going out of business. So far
imported raw materials from China was still very cheap, so businessplayers tend
to change from producers to traders. “It is much les costly to be traders,”
Hidayat Nyuakman, Chairman of FIKI disclosed to Business News [15/8].
The industry had to secure supply chain of raw materials,
especially the refinery line in chemicals which gas or petro-chemicals. The
domestic industry did not have much choice but to facilitate. Infra structure
procured by the Government would be supportive to domestic industry, “We need
harbor service, good road access etc supported by the Government.”
The potential of chemical industry was not ignorable,
coal based or gas based; unfortunately it was not supported by applied
technology. Many handcap was felt because there was no support of advanced
technology. The domestic industry had not enough supply of components like
ethylene of propylene. To illustrate, PT Chandra Asri Petrochemicals Tbk
produced only around 600.000 tons per year, but Chandra Asri had been
established around 30 years ago. The chemical industry in Thailand had only
been set up around 5 years, but the production capacity had reached millions of
tons per year, way above Chandra Asri’s production output.
80 percent of chemical raw materials used by the domestic
were imported. The exporter countries for petrochemicals were in the Middle
East, but there were also processed chemical materials imported from Japan or
South Korea. FIKI saw the need of business networking and partnership with
exporter countries. “The overseas producers needed a market they would be
interested in investing” Hidayat remarked.
Toward the Europe Economic Community [EEC 2015] the
domestic resources and market were sought after the investors. The condition
should stimulate competition for growth. Indonesian dependence on imported
chemical raw materials was still high but it could be compensated by support of
fiscal and tax holiday. “the upstream industry need fiscal support”
The Ministry Industry in 2012 disclosed growth of the
down stream petro-chemical industry at 11% while the upstream industry grew by
9% while the upstream industry remained to grow by 4%.
The condition was contrast with Indonesia, a country rich
in natural resources but inferior by management. In fact with abundant natural
resources, Indonesia did not have to import petrochemical raw materials. “We
are rich in natural resources to support petrochemical industry like natural
gas and refinery. If the Government maximized exploration of natural resources,
dependency on imported raw materials would be lessened and investment could be
enhanced.
Wide discrepancy between upstream and downstream made it
hard for expansion. Investment climate for the upstream sector must be bettered.
“Our petro-chemical industry is still fragile. Strong commitment is called for
to improve it or else we would not only lose competition at Asean level but
sustainability at national level is also under threat”
Meanwhile the Directorate General of Manufacturing
Industry stated that today the Government through the Ministry of Industry was
scheming up a Bill on Chemical Products to be discussed at the National
Legislation Program 2015 in House. “This Bill is expected to reform management
system in national chemical industry to be in accordance with international
regulations,” Harjanto disclosed to Business News [14/8].
Although slowing down, export increase of national
industry of January-May 2014 was posted at 2.95%. the figure was calculated
from ratio of same period in 2013 which contributed 66.32% to national economy.
The condition was a good start for industry growth including of national
petrochemical industry.
The Chemical Metal Industry was a strategic sector which
often served as reference in national industry growth. The chemical industry
was closely related to production chain industry was closely related and raw
material procurement for the down-stream industry like coating, electronics and
automotives.
Meanwhile in the metal industry sector the Government
planned to enhance downstreaming plan for minery-based industry which would
cold propel national economy through increase of added value, strengthening of
industry structure, and opening of employment opportunities at home. The metal
industry played its important role in the development of upstream industry
especially automotives, aviation, machinery and infra-structure. (SS).
Business News - August 20, 2014
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