Contribution of national
industry to Indonesia’s GDP was constantly declining as there was no commitment
among skateholders to promote this sector as priority sector. Unfortunately,
from 2001 to quarter II of 2013 performance of national industry was not
showing any significant progress.
The issue of industrial decline surfaced again lately
just when national industry had to embark on a new era, i.e. the ASEAN Economic
Community [AEC] 2015 which would be effective per January 1, 2016. In 2001,
contribution of industry on national GDP was 29.1%; in 2005 it went down to
27.4%. In 2010 it slumped to 24.8% and in 2011 down again to 24.3% until
finally in quarter III-2013 contribution of GDP on industry to GDP dropped to
only 23.11%.
The main cause of slowdown in national industrial
performance was : no joint commitment between the ministries and institution to
promote national prioritized industry the integrated way. In other words, there
was no comprehensive industrial downstreaming plan for various reasons lack of
tax incentive, limited quality of Human Resources, high bank interest and
workers demand for Minimum Provincial Wages.
In addition to the above, policies which was not
supportive to reducing production cost was one of the reasons why national
industry’s performance tend to stationary. This was not to mention bad harbor
services, poorly maintained roads etc. In the end, slowdown in national
industry growth had its effect on national import-export activities with
counterpart countries.
Of 13 trading counterparts in the period of January –
October 2013, Indonesia only posted surplus with 4 countries, namely Singapore,
England, the USA and India. Deficit was posted with Malaysia, Thailand,
Germany, France, China, Japan, Australia, South Korea and Taiwan. So the
Government must promptly promote performance of national industry so the real
sector could develop.
Toward MEA 2015 soon endeavors should be focused on
strengthening competitiveness on the weak spots. In the end, degradation of
national industry would have its effect on employment. The process of
employment, especially in the premium sectors like agriculture was constantly
declining and only accommodated 38 million workers in 2013 against 37 million
workers in 2010.
Increase of Minimum Wages [UMP], oil fuel price [TDL] and
LPG gas, posed ad hard blow to industry and caused mass dismissal of workers.
So the Government must understand the need of national industry. In short, economic
ministers must not make their own dispersed regulations. Integration and sound
inter ministrial collaboration became indispensable. Attention should be focused
on maximizing employment by mapping out important sectors in tandem with
activation of labor intensive industry in the said sectors.
Sharing the above expectation, the Financial Service
Authority [OJK] had instructed national banks to increase pipelining of
investment credit. The priority was credit to the manufacturing sector, energy
sector and infra structure sector. The three economic sectors must be spurred
on to refresh and revitalize national industry to produce products of high
added value.
In terms of credit, portion of the 3 segments were
relatively small against total banking credit so there would be enough room to
absorb credit. OJK’s data per November 2013 last posted credit energy only
2.44% of total banking credit amounting to Rp3,241.04 trillion while credit for
infra structure in the manufacturing sector contributed 3.63% of total credit.
In terms of growth, credit for energy including
electricity, gas and water was posted to grew by 17.91% [y o y] to become
Rp79.21 trillion in November 2013. Furthermore credit for infra structure
included in the manufacturing sector, grew by 19% [y o y] to become Rp117.80
trillion per November 2013.
The good news was that this week first and second tier
banks would prioritized credit to the manufacturing and infra-structure sector.
Meanwhile most Government owned banks stepped up their investments in the
energy and electricity sector. For credit expansion, direct payment platform
would be used as well as credit syndication or consortium. The platform to be
used by each bank considered bank’s liquidity capacity. Generally for big scale
payments worth trillions of Rupiah, syndication plan was often adopted to
minimize risk so cases of non-performing loan would be under control.
OJK record had it total NPL value by last November was
Rp606 billion or up by 95% against same period the previous year at Rp310
billion. The same was happening in the infra structure sector; NPL in this
sector was Rp4.43 trillion up by 14% against same period the previous year at Rp3.87
trillion.
The condition was different from consumption credit.
Let’s say NPL in automotives was Rp859 billion, shrinking by 22% against the
previous Rp1.1 trillion by end of November 2012. Bank’s passion for the
consumption credit sector was also seen through bank interest. The average
interest of investment credit rose from 11.25% to 11.74%. Strangely consumption
credit interest thinned out from 13.53% to 13.12% per November 2013. With BI’s
monetary policy which tend to be tight in the consumption sector, it seemed
reasonable that consumption credit tend to slowdown.
For
that matter, allocation for expansion to productive sector must be given to
make sure that Indonesia would not lose the momentum of bettered global economic
condition. The opportunity to promote export and draw capital inflow was
opening wider. Now was the moment for banks to jack up credit for the
industrial sector whereby to meet the growth target of around 5.5% - 6.0% this
year. (SS)
Business News - February 7, 2014
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