Real Sector to Remain Stagnant
Friday, 09 June, 2006 | 16:35 WIB

Tempo Interactive, Jakarta:It is estimated that the growth of the real sector will remain stagnant this year. In addition to the continuing high interest rate, there is not yet internal restructuring from the real sector itself. “As long as there is not yet industry restructuring, because the credit is at a standstill, the real sector is stuck,” said Imam Sugema, Head of the Institute for Development of Economics and Finance, yesterday.

According to Sugema, the stagnation will not only be affected by the high interest rate. For when the rate still stood at 7.5 percent last year, the real sector was still not capable of achieving loans.

Gunadi Sindhuwinata, Chairperson of the Indonesian Motorcycle Industry Association, has predicted that the growth of the motorcycle industry will decrease by 30 percent. “While the motorcycle's growth in 2005 has increased 30 percent compared with 2004, we have a 30 percent decrease this year or going back to the position of two years ago,” he said.

According to Sindhuwinata, the high interest rate shows high inflation. Therefore, the market will not react and shift the goods that will be up for sale. “It means that the demand for motorcycles will increase. As a result, manufacturers must produce efficiently and adapt their production to market demand,” he explained.

Meanwhile, Eddy Widjanarko, the Chairperson of Indonesian Footwear Association, has denied Bank of Indonesia's statement which has estimated that the real sector is not prepared to receive a loan disbursement. Widjanarko said, the manufacturing and exporting performances are undergoing an increase. “It's now advantageous for footwear industries to produce. A five percent sales increase from exporting in 2005, or of evaluating US$ 1.5 billion, has shown that this industry remains thoroughly tested and prepared to receive loan disbursements,” he said.

RR Ariyani
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