LABOR-INTENSIVE INDUSTRIES CONSIDERED TO RECEIVE INCENTIVE

The government is considering a convenience for labor-intensive manufacturing industries to get incentives which is considered capable of industries. Industry Minister, MS Hidayat, in Jakarta (Monday, July 29), said that labor-intensive manufacturing industries will be considered to be given easiness in obtaining incentives. Hidayat pointed out that to earn incentives in the form of tax holiday, investors should invest Rp1 trillion. However, if there is a labor-intensive manufacturing sector with an investment value of below Rp1 trillion, if could be considered.

Some examples of labor-intensive industries are textile, footwear, and furniture industry. Then, industry which brings the technology and provides a multiplier effect on other industries, even grow new industries. According to the Minister of Industry, the proposal for the consideration of incentive giving can be realized in the near future.

 

Hidayat said that the government plans to focus on maintaining the performance of four industry sector to keep the Indonesian economy still growing at above 6% in 2013. The industry sectors are iron & steel, food and beverages industry, petrochemical industry, and electronics industry. He explained that the four industries should continue to grow in the midst of slowing economic growth in Indonesia.

Hidayat also explained that labor-intensive industries must absolutely be maintained so that unemployment rate will not increase and to help drive economic growth and national industry. He said that it was also the consensus between the government and Bank Indonesia regarding the current macro economic situation. The Minister said that labor-intensive sectors, such as textile and footwear, are also a leading industry to encourage growth of the national industry.

In addition to labor-intensive sectors, the Ministry of Industry is also relying on growth of capital-intensive industries which are able to give a chain effect on the creation of new industries and businesses. He is optimistic that industry growth until the end of the year could reach 6.5%. it could only be achieved if other ministries are involved in guarding a number of investment plans in the industry sector in order to be realized this year.

Meanwhile, Chairman of the Indonesian Employers Association (Apindo), Sofjan Wanandi, said that one of the obstacles of Indonesian economic growth in 2012 so it has not reached the target of Revised State Budget (APBNP) at 6.5% is infrastructure. According to Sofjan, to achieve the economic growth target at 6.8% in 2013, the government is expected to actively open up investment opportunities for labor-intensive industries and industries that are capable of producing commodities/goods. He saw that through-out 2012, investment is dominated by non-tradable industries that only absorbs smaller amount of labor, and allows more goods to be imported to Indonesia.

Sofjan said that many Indonesia entrepreneurs are waiting for certainty of infrastructure development. Therefore, it needs a more active infrastructure development in 2013. The government should also reduce fuel subsidy spending. The subsidy spending will be more useful if diverted to infrastructure development. He reminded that the government needs to be careful in completing the homework as promised, which is related to legal certainties.

He added that the industry that could boost Indonesian economic growth is an industry that is able to overcome unemployment and poverty problems. Agriculture, manufacturing, and banking are industries that can create jobs. In contrast, investment in Indonesia is currently dominated by capital intensive industries. 

Business New - July 31, 2013