TO ENHANCE GROWTH OF NATURE BASED NATIONAL INDUSTRY

The progress of a nation, depends among others on the progress of the national industry. With advanced industry, it was almost certain Indonesia’s economy would progress well with all the handicaps and consequences. Indonesia who had the ambition to be an industrial state must strive hard to realize the mission and division.

One of the sustainer of national industry was the non oil-gas industry. Rumors spread out that amidst unstable economic condition the non oil-gas industry surprisingly managed to grow by 5m21% in Q 1/2015 higher than even economic growth which was 4,71%.

“Apparently since 2011 to Q-1/2015 last, growth of non oil gas industry had always been above economic growth. Only in 2013 growth of non oil gas industry was slightly below that of economic growth. From that data the Government was optimistic growth of non oil gas processing industry could reach 6.83% by end of 2015 and in 2019 to reach 8.38%.

Increase of industrial growth in tandem with increased contribution of the non oil-gas processing industry against GDP was posted in 2015 at 21.22% and in 2019 at 24.15%.

The industrial sectors that grew high in Q-1/2015 were among others Pharmaceutical industry, Pharmacy and Traditional Medicines 9,05%; Basic Metal Industry 8.66%; Food & Goods Industry; Computers, electronic Goods, Optics and Electrical Equipments 8.14%.

Meanwhile export of industrial products till January 2015 was USD 9.07 billion, contributing 68.17% to total national export while import of industrial national product in January 2015 was USD 9.70 billion or down by 8.29% against same period of 2014 at USD 10.58 billion.

Through various efforts by the Government and all stakeholders of industry, the Government was optimistic than performance of industrial products would be more positive in the future. On the other hand, investment of domestic capital (PMDN) in Q 1/2015 came to Rp.17.45 trillion, an increase of 57,01% against same period of 2014 while investment of foreign capital (PMA) amounting to USD 2.87 billion was a downturn of 17.92% against same period of 2013. This should be attended to consider that investment was the propeller of growth and provider of employment opportunities.

In developing industry, the Government was expecting that a sound and competitive industry would be built over the period of 2015 – 2019 through strengthening of national industry structure, increase of added value, to open employment opportunities, and to strengthen national resilience.

Therefore national policy and development strategy must be focused of 6 aspects, i.e. stipulation of prioritized industry, development of industrial resources; empowerment of industry; development of industrial facilities; development of small and medium industry, (IKM) and industrial zoning.

The policy to develop manufacturing industry was executed in the following ways:

Firstly, to develop industrial zoning, by facilitating development of 14 industrial centers outside Java and development of 22 Small-and-medium industry centers, 11 in East Indonesia and 11 in West Indonesia.

Secondly, to develop industrial population, by developing 9 thousand units of big and medium scale industry of which 50% was in outside Java and to develop 20,000 units of business entity.

Thirdly, efforts to strengthen competitiveness and productivity, by way of among others: to step up technical efficiency to command over technology and to enhance innovations, and to enhance new products development by domestic industry and to open minded to inputs.

Admittedly there was one great challenge in the industry sector to be in the near future: the implementation of the Asean Economic Community (AEC) by end of 2015. The implementation of AEC could, on the one hand, open access for Indonesian products to Asean market, but on the other hand unless well anticipated Indonesia’s big market would be mere sitting duck to foreign trade invasion.

Therefore the Government must call out all stakeholders of national industry especially the Indonesian Chamber of Commerce (KADIN) to mobilize businesspeople oh high competitiveness to compete tightly against competitors of other countries. The Government had their obligation to empower existing businesspeople and make a new breed of strong entrepreneurs to compete in Asean.

The Government was also preparing a defensive strategy to wall out foreign invasion of products through non tariff barrier instrument like the application of Indonesia National Standard of products certification. So far already 50 Indonesia National Working Competence Standard (SSKNI) and 25 Profession Certification Centers (LSP) as well as Competence Test Centers (TUK) had been set up.

About the policy promote use of Domestic Products (P3DN) which was a strategy to strengthen national to realize it. The effort was necessary in this era of globalization and economic liberalization which would bring change to national economy especially with the free traffic flow of capital, investment goods, services and workforce.

The Government’s legal foundation was clear that the effort to empower domestic industry was exercised by implementation of P3DN. The policy was also designed to enhance national self reliance in economy.

The legal based and Government’s commitment to implement P3DN was mandated in Trisakti and Nawa Cita Philosophy toward national economic self reliance, Presidential Instruction Number 2 year 2009 on the use of Domestic products in Government’s goods and services Procurement; Law No 13 year 2014 on industry and Regulation of the Ministry of Industry No. 02/M-IND/PER/1/2014 on the Guidelines for Promotion of the Use of Government’s Goods and Services.

The objective of P3DN implementation was among others to increase use of domestic parts and products by the Government, to empower domestic industry by commanding the domestic market and minimize dependency on imported products by using capital goods, raw materials, components and technology from the domestic resources.

The P3DN objective was to enhance use of domestic products by state ministries and institutions, BUMN, BUMD, BUMS and the public To maximize use of local made components, to promote TKDN certified products and to enhance national pride in using domestic products.

On the other hand, execution of P3DN policy was related to 3 aspects, i.e. mandatory users of P3DN, users Duties, and Producers obligations. P3DN included:

Firstly, Government’s institutions, Ministries, non Ministrial Government bodies, and SKPD task force for procurement of goods and services from state’s budget and Regional State’s budget, including grant from domestic or overseas resources

Secondly, BUMN, BUMD, and BUMS in the procurement of goods and services financed by APBN budget, APBD or projects based on collaboration between the government and private companies.

The obligations of users were :

1. Mandatory to use domestic made products for domestic products containing total TKDN value and BMP at least 40% with total goods TKDN at least 25%.
2. Mandatory to insert requirements of domestic products that must be used.
3. Mandatory to give price preference of domestic products of construction service at least 75% above lowest price offer of foreign service company

The obligations for producers were:

One : the magnitude of TKDN value and Value of Company’s Benefit (BMP) on domestic products presented must be in accordance with the value in the inventory list of domestic goods/services issued by the Ministry of Industry.

Two : industrial company as producer of goods inserts value of TKDN already verified on product’s label

Three : producers and /or provider of goods were obliged to guarantee domestic products presented in procuring domestic products at home.

Some of the infra structure projects which already had their P3DN accomplished were:

1. Upstream oil gas industry under coordination of SSK Oil Gas and exercised by K3S Working contract under the Ministry of Energy and Mineral Resource (ESDM).
2. Building of power plant and transmission of energy, PT PLN, PT PGN under the Ministry of BUMN.
3. Building of roads infra structure, dams, bridges, housing under the Ministry of Public Works and People’s Housing.
4. Construction of railway, harbors, airports, transportation, maritime connectivity under the Ministry of Transportation.
5. Building of information and technology system by PT Telkom Indonesia under the Ministry and Information and Communication

From the above picture it was apparent that to initiate development of national industry it was right for the Government to act in collaboration with the related Ministries and Institutions with emphasis of using domestic resources toward national economy resilience. (SS)

Business News - May 27, 2015