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Twelve Manufacturing Sectors Able to Compete against China ACFTA May Bolster Investment

JAKARTA: The government is optimistic twelve local manufacturing industries will be able to manufacture major products to be exported to China.
The top sectors are also believed to be able to contain the aggressiveness of Chinese product invasion to Indonesia.
Minister of Industry M.S. Hidayat revealed the 12 sectors still had several major products to compete head-to-head with Chinese products. The competitiveness of the 12 sectors was also expected to reduce trade deficit.
In 2008, Indonesia's trade deficit with China reached US$3.61 billion due to the huge non-oil and gas export deficit of US$7.61 billion.
In 2009, the trade deficit is estimated to reach US$4 billion. Review by the Minister of Industry showed products with huge competitiveness in the textile sector were, among others, single yarn of combed fibers, cotton weighing more than 200 g/m, and cable yarn.
The top products in the machinery sector were boiler and cylinder blocks for earth moving machinery. Oleochemical products were also considered major products.
In the meantime, products from the metal industry expected to have its export to China increased were scrap iron from platinum, ferronickel, and several direct reductions of iron products.
During the ACFTA, the export of electronic products, such as water pump, compressor, printer, copiers, and faxes is expected to increase. Upstream chemical products, such as anhydrous ammonia-based products and silica powder and downstream chemical products, such as paint coater, and prophylactic pastes and powder, are also expected to find their exports increasing.
Competitive
At least there are around 452 tariff posts in the 12 manufacturing sectors considered to have competitiveness similar to China since their RCAs hover at 0-3.
"Specifically, we also anticipate the negative impacts on four industrial sectors, namely the iron and steel, fabric and apparel, machinery, and footwear sectors," he said at a joint working meeting of five ministers with the House's Commission VI yesterday.
Amid lower competitiveness and the possible layoffs of hundreds of thousands of workers, explained Hidayat, the Asean China Free Trade Agreement (ACFTA) was still potential to bolster investments from China's manufacturing companies in Indonesia.
According to him, the realization of investments from China following the signing of the ACFTA on November 29, 2009 increased by an average of US$50 million per annum during 2005-2009 from the previous US$16 million per annum (2000-2004).
China in 2000 only realized a total investment of US$2.53 million from two business permits, but it surged to US$41.03 million in 2009. (Bisnis/yuw)

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[Last update: 2010-01-21 03:28:12]