Friday, 11 September 2009

Government Sets Target for Industrial Machineries Restructurization Worth Rp. 350 Billion by 2010

The Government set a target to carry on with technological advancement till 2010, allowing a fund of Rp. 350 billion. According to the Directorate General of Textile Metal-Industry Machinery and Variety [ILMTA] of the Department of Industry Ansari Buchari on the occasion of the official opening of the 4th International Metalworking and Machine Tools Expo 2009 and Indo Automotive Indoplast Indoprint in Jakarta, Wednesday [12/8], the 2010 Restructurization Program would be focused on four industrial fields namely textile, footwear, sugar mill, and up stream petro chemical industry.

“Of the said amount, the biggest potion is allocated for the Textile-and-Textile-Products while the rest of the fund amounting to Rp. 50 billion would be allocated for 3 industry lines namely textile, sugar mill, and upstream petro-chemicals – whilst the biggest allocated fund for Textile-and Textile-Products totaling Rp. 200 billions. IF the Parliament approves the budget next year, it means the restructurization plan has embarked on the third year, and the program is estimated to last between 3 to 5 years” Ashari Buchari remarked.

Further in a written message Ansari remarked that the statistical data as reported by the Board of Statistics [BPS] revealed that export of industrial manufacture products in the past five years [2004-2008] rose by 18.5% on the average per year which in 2004 reached only USD 1.61 billion, and in 2008 reached USD 4.28 billion.

Similarly, the import of machinery products including components, showed an upturn of 2.4% on the average per year, i.e. reaching USD 15.47 billion compared to USD 5.52 billion in 2004. Although the absolute figure of import of machinery products exceeded that of export, the trend of export in the past 5 years had been rising by 18.5%.

“We see a promising market opportunity domestically, and this condition is due to need for infrastructure development including road building, construction of bridges, buildings and infrastructures for oil and gas explorations like off-shore oil rigs. On the other hand the domestic industry is only capable of producing less sophisticated machines like tanks, tools [though limited], and boilers. Where instruments of higher precision are needed, certain machinery tools still have to be imported” Ashari Buchari remarked.

On the other hand, one of the managers of the Indonesian Chamber of Commerce [KADIN] and Chairman of the Combined Association of Metal and Machinery Industry [GAMMA] Achmad Safiun remarked that supposedly basic industry consisted of all types of industries classified as machinery tools whereby to support the development of infrastructures. However those industries could only operate effectively if the domestic steel industry were strong.

“The steel industry must have a broad-based spectrum, meaning to serve as a wider base, instead of just specializing in a few items. The steel industry should produce a wide range of products from iron ore to iron cust, sheets and pipes of different specification” Saifun remarked.

The inferior capacity and capability of local metal industry accounted for the low contribution of manufacturing industry to the nation’s GDP. Through Quarter II this year the contribution of processing industry to national GDP was down to the level of 26.27% compared to Quarter I which reached 23.44%. Meanwhile the Government set a target for processing industry’s contribution this year to reach 23.44%.

According to Saifun, the decreasing percentage was mainly caused by financial crisis and also due to low absorption of bank credit in the machinery processing sector. Fading trust and confidence also accounted for the regress, in line with the closing of factories which resulted in dismissal of workers; consequently banks were extra-cautious lest the debitors might fell into default installments.

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