Sunday, 16 June 2019 00:00

Impact of Trade War, Indonesia Has Opportunities

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Minister of Industry Airlangga Hartarto Minister of Industry Airlangga Hartarto kemenperin

Indonesia is considered to have opportunities in the midst of a trade war between the United States and China. Because, Indonesia still has strong economic fundamentals in facing the current global situation.

"For Indonesia, actually the US-China trade war is a zero sum game, which means no one benefits. But here we have a chance. With this trade war, people see our country in a safe zone, "said Minister of Industry Airlangga Hartarto in Jakarta on Sunday (16/6).

The Minister of Industry explained that Indonesia had entered the investment safe zone 20 years ago, namely after the end of the New Order and the start of the Reformation period. "As a country with fairly stable geopolitical conditions, Indonesia is increasingly being targeted by foreign investors," he said.

Some time ago, rating agency Standard and Poor's (S & P) Global Ratings upgraded Indonesia's long-term debt rating or sovereign credit rating from BBB to BBB with a stable outlook. Thus, Indonesia now has an investment grade status from the three international rating agencies, namely S & P, Moody's, and Fitch.

Airlangga added, Indonesia is being seen as one of the countries that is serious in developing the digital economy. It has become a positive value for business people in the world. "In fact, Japanese Prime Minister Shinzo Abe sees Southeast Asia especially Indonesia as a ground for digital economy," he said.

For this reason, one step that needs to be done now is to increase the competitiveness of the national manufacturing industry so that it can be more competitive with neighboring countries such as Thailand and Vietnam. "Indonesia is still an attraction for investment in electronics, garment, footwear and food and beverage-based industries," he added.

For example, the electronics manufacturer Sharp Corporation and LG Electronics will increase the capacity of their factories in Indonesia. The products they will produce for export and domestic purposes.

The Minister of Industry said, his side continued to monitor the development of the LG and Sharp factory expansion or expansion. "We are still monitoring until they are realized. The discussion has been long, "he said.

According to Airlangga, the two electronics-based industries already have a production base in Indonesia, so that if there is a factory relocation, it will be expansion. "So, it is expansion. One of them is because they already have experience in Indonesia, and Indonesia is considered to be stable," he added.

Meanwhile, Ministry of Industry Director of Electronics and Telematics Janu Suryanto said, Sharp would relocate a two-tube washing machine factory from Thailand to a factory in Karawang International Industrial City (KIIC).

The plan, the inauguration of the Sharp plant expansion will be carried out next month. "So, there will be additional production lines. This is also for the export market. "They will absorb hundreds of workers," he said.

Meanwhile, LG will relocate air conditioner factories from Vietnam to production facilities in Legok, Tangerang. "They will start production and will be marketed in September 2019 as many as 25 thousand units," he said.

Furthermore, the production amount is targeted to increase to 50 thousand units. "Yes, at least it can be exported (also) to ASEAN. Sharp and LG investments are around hundreds of billions of rupiah," he added.

The manufacturing industry is one sector that contributes significantly to total investment in Indonesia. In the first quarter of 2019, the non-oil and gas processing industry contributed 18.5% or IDR 16.1 trillion to the realization of domestic investment (PMDN).

The three sectors that support the largest total domestic investment in the three months earlier this year, namely the food industry that poured funds reached Rp. 7, 1 trillion, followed by the base metal industry Rp. 2.6 trillion and the tobacco processing industry Rp1, 2 trillion.

Furthermore, the manufacturing industry also deposits up to 26% or USD 1.9 billion towards the realization of foreign investment (PMA). The three sectors that support it, namely the base metal industry amounting to USD593 million, followed by the food industry USD376 million and the chemical industry and goods of chemicals USD217 million. (kemenperin) 

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