Kadin expects electronics exports to double by 2010

Andi Haswidi, The Jakarta Post, Jakarta

As one of the top industries that have the potential to push Indonesia's economic growth above 7 percent, the electronics industry should be able to double exports to US$15 billion by 2010, the Indonesian Chamber of Commerce and Industry (Kadin) has said.

Based on its 2030 Vision and 2010 Industry Roadmap -- the result of nine months of research soon to be presented to President Susilo Bambang Yudhoyono -- Kadin said the industry could be one of the backbones of the national economy by 2010.

By that time, the electronics industry could be able to supply 75 percent of domestic demand and employ around 170,000 people, Kadin chairman M.S. Hidayat said while unveiling the roadmap recently.

The roadmap was drawn up by a team of researchers headed by University of Indonesia economist Faisal Basri.

The roadmap suggests a set of approaches the government should take to develop the electronics industry.

They measures are: improving poor infrastructure that causes traffic jams and delays in customs clearance; improving immigration controls to end visa approval delays; strengthening supporting industries; tackling counterfeiting; implementing safety standards; and promoting made-in-Indonesia products.

Indonesia's electronic goods exports have been among the lowest in Southeast Asia over the last few years. Indonesian electronics exports reached US$7.9 million in 2004, while the Philippines exported $24 million worth of electronics, Singapore $41 billion and Malaysia $63.5 billion.

In 2005, the country's electronics exports fell further to $7.65 billion. On the domestic market, the industry was only able to meet 36 percent of demand, which in that year reached about $2.4 billion.

Kadin vice chairman Rachmat Gobel, who also chairs as the president commissioner of PT Panasonic Gobel Indonesia, told The Jakarta Post that the electronics industry was suffering from an influx of illegally imported products.

"We must protect our market from these illegal products. This may be a tough job for the government considering the country's geographical profile of having so many islands," Gobel said.

An alternative way to combat illegal imports was to compete on price, Gobel said. He suggested that electronic goods should no longer be considered luxury goods and should as a result attract less tax.

"The flourishing of illegal imported goods is partly due to the high tax on electronic goods as they are still considered to be luxury goods. If the 30 percent tax is cut to say 20 percent, illegal importers would lose their competitive edge."

"Market protection is crucial, even markets in developed countries also do it. Indonesia is a big market, which is a big benefit for investors. We must be able to use it to our own advantage," Gobel said.

If the suggestions on Kadin's roadmap were followed by the government, then there would be no reason for the industry not to flourish and become one of the four key industries picked by Kadin to drive the country's economic growth, Gobel added.

Aside from electronics, the other three industries singled out by Kadin are the textile, automotive and shipping industries.
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