Development of machine industry to become government's top priority

The Jakarta Post, Jakarta

The Industry Ministry says it intends to focus on promoting four industrial engineering sectors -- the agricultural, factory, electrical and heavy machinery industries -- as part of the government's long-term industrial development program.

The ministry's director general of metal and textile industries, Anshari Bukhari, said Friday in Jakarta that the promotion of these four industries would be prioritized so as to reduce the country's reliance on imports.

Ashari said that the agricultural machinery industry was a priority as demand for such machinery would continue to increase, thus requiring the development of light engineering at the local level.

He said that the heavy equipment industry would be encouraged to use more local raw materials and components, and to develop export markets.

"The factory machinery industry will be encouraged to support the development and expansion of palm oil and sugar refineries, with 90 percent local-component usage," Anshari said.

He said the machine industry had good prospects, with the country already boasting a number of well-established engineering firms, such as PT Indomarine, PT Puspetindo and PT Pindad.

As for electrical machinery, Anshari said the focus here would be to encourage the industry to support the government's crash power-plant development program.

The crash program has been instituted to ward off a future power crisis and also reduce state electricity firm PLN's dependence on oil-based fuels for power generation. Power plants that use such fuels currently account for between 30 and 35 percent of PLN's total generating capacity.

Anshari admitted that the government had paid insufficient attention to developing the machine industry in past years.

"Not enough locally produced machinery is being used, especially in government projects, whether central government or local government, despite the presidential decree of 2003," Anshari said.

He also admitted that most local engineering firms were as yet unable to comply with the Indonesian National Standards (SNI).

The government, through the Trade Ministry, has recently been actively promoting the use of SNI-compliant products through the placing of advertisements in the media highlighting the fact that all SNI-certified products satisfied health, security, safety and environmental standards.

Anshari estimated that total investment in the industrial machinery sector dropped by 2.1 percent this year compared to last year, with average capacity utilization running at 65.04 percent.

Despite this, total industrial machinery exports for 2006 were expected to increase 16.16 percent from US$1.9 billion in 2005 to $2.2 billion, while imports would decrease by 14.83 percent from $7.1 billion to $6.4 billion.
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