Indonesia electronics companies claimed not ready to face the era of the ASEAN Economic Community (AEC) which will take place from January 2016. Today, the Indonesian electronics market is dominated by imported products, including low-quality ones. Using the ease of import, most industrialists have turned to traders. This all happened because the government does not have a vision, and the electronics industries are not getting adequate support.
Unpreparedness of the Indonesian electronics industry is evident in the invasion of imported electronic products that continues to increase, the contribution of Indonesia electronics exports which continues to decline, and the slow growth of invasion of domestic electronics products. A lot of regulations block the growth of the industry. Fiscal policy tends to shut down the electronics industry.
Chairman of the Federation of Electronic Association (GABEL), Rachmat Gobel, on Friday (October 10), stated that all electronics industry were not ready to face AEC at the end of the next year. Because in addition to low competitiveness, the dependence on imports is not small. Rachmat said that import of finished goods is cheaper than producing goods domestically, and this is not a new problem faced by the industry. According to him, the settlement’s commitment to increase production base in the country.
Rachmat said that so far electronics manufacturers tend to do only the assembling process in Indonesia. The assembled components were not made by the domestic industry, but imported, especially for high-tech products. The production facilities built did not create a production base from upstream to downstream. Based on data from the Ministry of component products is only able to outperform four ASEAN countries, namely Brunei, Myanmar, Vietnam, and Laos. Even worse, information technology and consumer electronics products are only better than two countries, namely Myanmar and Brunei.
A lot of government policies are mistaken, such as the policy on import duties on imported goods which are cheaper than the competent. As a result, many of goods sold in the domestic market are imported products. The government also claims to encourage the growth and development of the manufacturing industry in the country through technology transfer, but reality, there are no incentive policies that encourage the growth of the industry and the technology transfer.
Consequently, most of the products in the domestic market are also manufactured products. Although there are also manufactured products, he added, part of its components are imported. For example, refrigerator, the core component is the compressor, but until now it is still imported. Television with the application of advanced technology is still dependent on the supply of imported components at 70% - 80%.
Based on data of the World Bank processed by Ministry of Industry, this year alone, balance of trade of Indonesian electronic products to ASEAN is less than Singapore and Malaysia. Because the Indonesian trade deficit in this sector for ASEAN region reached USD 593.2 billion. While, Singapore and Malaysia respectively recorded a surplus amounting to USD 6.28 billion and USD 2.54 billion. Indonesian exports supply to ASEAN is only about 22%, while Singapore reached 31.8% and Malaysia 26.8%.
Globally, electronic exports from Indonesia ranked the 29th in the world. While, Singapore ranked the 5th, Malaysia the 10th, and Thailand 14th last year. Rank 29 occupied by Indonesia is equivalent to export acquisition last year which is only USD 10.4 billion. While, Singapore booked USD 124 billion, Malaysia USD 60.7 billion, Vietnam USD 38.4 billion, Thailand USD 29.5 billion, and the Philippines USD 20.3 billion.
Rachmat admitted that other ASEAN countries have been preparing themselves from the beginning. For example, Thailand who wants to develop automotive industry, they are comprehensively preparing and consistently building their industry, which has now developed into a big industry. Investment in the automotive component industry is also strong. Although auto sales Indonesia, which has a great number of population, can be equal to Thailand, from the aspect of industrial strength, Indonesia lags far behind. (E)
Business News - October 15, 2014