Wednesday, 18 December 2013


In anticipating the formation of AEC 2015 particularly on the Fee trade Agreement side, the Government felt it necessary to pay special attention on some machinery industries like boiler, pump products, agro equipments and electrical equipments, so in terms of import tax those products were still in the list of sensitive category.

As disclosed by the Director of Machinery Industry and Agro-machinery of the Ministry of Industry Teddy C. Ciantury in Jakarta on Friday [6/12], the regulations were applied on industry which were expected to develop higher at home, so the average applicable tax income would be around 5%-10%. The Government was promoting development of agro equipments at home including turbine industry.

The said industry was today already in Indonesia, so all the Government needed to was to strengthen them. And naturally the industries were expected to be more competitive against imported products.

Therefore, one of the Government’s program was to scheme up a masterplan for building Machine Tools Center in Banung, West Java. The Government was expecting that the Tool Center would be a strategic project which would determine the future course of development, particularly in tools machines which were at present still dominated by imported products.

Other efforts of the Directorate of Machinery through theirs policy was to set up a standard of competence to evaluate the human resources potentials such as knowledge in engineering which would soon be entrusted to local technicians. However it was still necessary to formulate the plafform to be applied and it might be necessary to coordinate with the Ministry of Manpower and Transmigration, particularly the National Board of Certification, which would hold the authority to issue the certificate.

Through formation of the Indonesia National Manpower Competence Standardization [SKKNI] establishment of standard of competence in machinery industry was already set up, i.e. for the machines and welding instruments. The policy was soon be elaborated further, whether to be managed by the Ministry of Manpower or the Ministry of Industry.

To step up Competitive Edge

In the effort to strengthen competitive edge of national industry, especially toward AEC to be effective in December 2015, Minister of Industry Mohammad S. Hidayat stated in Bali on Thursday [5/12] that formation of AEC was common agreement among Asean leaders at the 9th Asean Summit Meeting in Bali in 2003, with the objective to set up Asean as single market and integrated production based, whereby there would be free traffic flow of goods, services in this region with tax exemption to be applied be inter-Asean trading.

Realizing the importance of external trading with countries outside Asean, some characteristics had been defined as key factors for AEC 2015, i.e.

1.       Single market and production base
2.       Highly competitive Economic Region
3.       A region of equitable economic development and
4.       A region fully integrated into global economy

These key characteristics were features of AEC which was outward looking in facing competition from countries outside Asean.

Beside the initiative to liberate the market of goods, service and investment, ASEAN also had the initiative to integrate production in ASEAN in the form of Asean Production Chain; better know as Priority Integration Sectors [PIS].

[PIS was divided into 2 forms, i.e. goods sector and service sector PIS included:
1.       Agro-based products
2.       Automotives
3.       Electronics
4.       Fisheries
5.       Information & Communication Technology [ICT]
6.       Rubber-based products
7.       Textile & apparel
8.       Wood based products

PIS of the service category included :
1.       Healthcare
2.       Air Travel
3.       Tourism and
4.       Logistics Services
“Although by nature PIS was onward looking, i.e. as ASEAN form of cooperation in facing competition from China and other emerging among Asean members themselves” Hidayat remarked. The inter Asean competition could mean fight for the leader position: who would play greater role in Asean production base. 

As implementation of the 12 PIR Sector concept, the Ministry of Industry played their role in setting up integrative steps for 7 [seven] PIS sectors to be part of ASEAN Production Chain, i.e.
1.       Agro based product
2.       Automotives
3.       Electronics
4.       Information & Communication Technology [ICT]
5.       Rubber based products
6.       Textile & apparels and
7.       Processed Wood Products

In the integration of Asean Product Chain, Indonesia was expected to play an important role not just as supplier of raw materials and end result products but also as production base. The integration process must involve businessplayers especially State Owned Enterprises [BUMN] amd national private companies to build production bases in Asean where Indonesia was expected to play their role. 

Business News - December 11, 2013

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