Hard for Industry to Reach 7.7 Percent Growth
Wednesday, 31 May, 2006 | 10:08 WIB

Tempo Interactive, Jakarta: The target of industrial growth of 7.7 percent set by the Department of Industry is going to be difficult to achieve.

Muhammad S. Hidayat, Chairman of the Indonesian Chamber of Commerce and Industry (Kadin), has said up to now the government has not shown much concern regarding growth of the real sector or strengthening macro-economy stability.

“Industrial growth is below five percent, because growth in the real sector has been sacrificed for the benefit of the macro-economy,” said Hidayat yesterday (30/5).

He went on to say that the focus towards the macro-economy is in fact better, but the government appears to have abandoned the real sector.

Hidayat went on to say that during the last three months the real sector has become more critical than last year.

The government and Bank Indonesia have said they will give time until September for the real sector to recover.

“Up until September, we have requested during this condition that is not yet optimal,” said Hidayat.

He said he was concerned about numerous companies that are unable to survive, especially in the manufacturing industry where there has been continued unemployment.

According to Hidayat, the flow of foreign investment this year does not make Indonesia a target country for investment such as China, India, and Vietnam.

Previously, Fahmi Idris, the Minister of Industry, said the target for industrial growth this year was 7.7 percent.

To achieve this, the Department of Industry is targeting growth in every area of industry, including food and beverages of 4.5 percent, textiles and foot apparel 4.3 percent, timber and forestry products 2.1 percent, fertilizer and chemicals 9.5 percent, iron and steel 0.01 percent, and cement and non-metal mined minerals 8.0 percent.

The sluggish real sector growth, said Hidayat, can be seen be the fact that the installed capacity of every industry not being optimal yet.

In addition, the sales rate of all industrial sectors has decreased by between 40 percent and 50 percent.

“This value is compared with the decrease in people's purchasing power,” he said.

Maruli Ferdinand
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