Wednesday, 16 September 2009

Labour and Investment Accommodated by The Industry Exceeds Medium-Term Development Plan (PRJM) Target

Although in the past five years the growth rate of the processing industry sector was unexpectedly below the average growth target of the Medium-Term Development Plan of 8.56% per annum, i.e. merely growing by 4.43%/year on the average, was surprisingly above target, investment wise or from the aspect of labour accommodation. After opening the Ramadhan Fashion and Accessories Product Expo at the Plaza Perindustrian, Tuesday [25/8] Minister of Industry Fahmi Idris disclosed Tuesday [25/8] the trend was on account of various factors.

Minister Fahmi stated, “In the Technical Meeting with Commission VI of Parliament on Monday [24/8] it was discussed that investment wise, domestic or foreign investor, showed indications of growth and so was working opportunities, in the same period, investment in the industrial processing sector the annual realization was posted at Rp. 19.41 trillion for domestic investment of USD 4.33 billion for foreign investment, based on the assumption of average exchange rate of Rp. 10 thousand per 1 USD, the Foreign Investment absorbed by the processing industry was around USD 43.29 per year.

When added up, the total foreign investment absorbed by the processing industry amounts to around Rp. 43.29 trillion per annum. When foreign and domestic investments invested in the processing industry are added up, the total average was Rp. 62.43 trillion per year. This figure exceeds the investment target in the processing industry of Mid Term Development Plan [RPJM] i.e. between Rp. 40 trillion up to Rp. 50 trillion”.

In export and import, increased were chalked up year after year. In the past 5 years there had been an average increase of export value 11.5% and import 22.47%. The performance of manufacturing industry had been most heartening, being able to contribute 65.21% on the average of Indonesia’s total export, although the total export of manufacturing in the past 5 years only contributed 66.8% on the average of Indonesia’s total import.

The figures of import value showed that according to category of economic goods, there had been increase in import through 2004-2009: 22.47% on the average. Meanwhile import of consumptive products rose 19.64%; import of raw materials/auxiliary materials rose by 22.8% and import of capital goods rose by 26.81%. Increase of capital goods import and raw/auxiliary products which were still high showed the low level of capital goods procurement and domestic raw materials used in the industrial sector.

The average fulfillment of production capacity in the industrial manufacturing sector only reached 64.2% on the average, which was below the target of National Mid Term Development Plan [RPJMN] of 80%. There were only around 47 industrial sub-sectors in Indonesia with production capacity of above 80%, while 96 sub-sectors, and 83 industrial sub-sectors had the capacity between 61% to 79% respectively. In fact there were even industries whose utility level was below 60%.

The sub-sectors having utilization level of above 80% were dominated by the upstream chemical industry with higher added value whilst the fixed capacity was lower. The industrial group with higher added value compared to the chemical industry such as machineries and electronics, the utilization ranged around 61% to 79%; many of them were even below 60%, like industries of radio/radio cassettes, palm oil processors, oil mill processors and metal processors.

The Fashion Industry
Upon opening the exhibition, Minister Fahmi stated, judging by the chain of production the scope was extremely wide, being supported by raw materials which were widely available in Indonesia. The raw materials used in the fashion industry were woven textile sheets, plain coloured or with designs, originating from the spinning and weaving industries which were now were widely developed in Indonesia.

In Indonesia there were 1,044 spinning and weaving companies employing nearly 345 thousand people, mostly located East Java and Central Java. The fashion industry were normally run by businesspeople, employing skilled workers like cutting, designing, sewing etc.

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