The government estimated that the growth of the national manufacturing industry in 2014 will reach 6% - 7%. The estimate refers to the target of Indonesia’s economic growth in 2014 at 6.4% - 6.5%, as the global economy has not fully recovered from crisis. The global crisis and the global economic growth slowdown will continue to overshadow global economic growth, including Indonesian economic growth. International Monetary Fund (IMF) pegged a pessimistic rate of Indonesia’s economic growth, i.e. 5.7% - 5.8%. However, the government is optimistic that this year the Indonesian economy will grow 6%.
The Indonesian Chamber of Commerce and Industry (KADIN Indonesia) considered that industry growth target of 6% this year will be achieved as long as downstreamization program is accelerated. Natsir Mansour, Vice Chairman of KADIN Indonesia for trade, distribution and logistics, in Jakarta, on Monday (August 18), said that industry downstreamization program, especially mineral, can increase value added in the country. He said that this during this time, the trade deficit was due to many imports of raw materials for the local manufacturing industry at about 70% of demand.
According to Natsir, the implementation of downstreamization in a variety of industry lines since the beginning of this year is often hampered. In addition to being affected by the political and macroeconomic climate, it is also hampered by incentive problem. He saw that the government has not prepared the appreciate incentives for guaranteed gas supply. Besides, he said, competitiveness of the industry should increase, especially that Indonesia will face the ASEAN Economic Community (AEC) by the end of 2015. He considered that competitiveness should be improved and things that burden production costs, such as high cost of logistics, high bank interest rates, and high electricity tariffs, should be removed.
Citing data from the Ministry of Industry, in 2014, some industry sectors that will be developed by the government are machinery industry, heavy equipment industry, medical equipment, low-emission motor vehicles, shipbuilding, aerospace, railways, defense equipment, electronics and telematics, software and multimedia content.
In 2014, the government continued the industry downstreamization program to increase value-added, such as in agro-based industries like oil palm, cocoa, rubber, rattan, mineral resource-based industries (iron, aluminum, nickel, copper) and oil & gas-based industries (petrochemical).
Industry development in the long term not just relied on natural resource-based industries, but also human resource competence-based industries, including research improvement, development, mastery of technology, and innovation.
Meanwhile, contribution of the industry sector to labor absorption continues to increase. Secretary General of the Ministry of Industry, Ansari Bukhari, said that the number of workers in the manufacturing sector rose from 12.37 million in 2011 to approximately 15.73 million in 2013. Manufacturing industry has absorbed approximately 13.87% in Indonesian workers and ranked the fourth largest after agriculture, trade and service.
According to Ansari, to support program of downstreamization of agro-based, oil & gas, and mineral-based industries, and for development of the manufacturing industry, it has to be supported by competent workface. Ansari further said that to anticipate and prevent the implementation of AEC in 2015 and to prepare the industrial workface in order to compete at the ASEAN level, the Ministry of Industry has taken some steps, among others, Vocational School and Vocational Higher Education within the Ministry of Industry has been directed to organize specialization and competency-based education accompanied with a teaching factory. Nowadays, we need more competent workface to anticipate growth of the industrial sector,” Ansari said. (E)
Business News - August 20, 2014