WWW.THESES.XLIBX.INFO
FREE ELECTRONIC LIBRARY - Theses, dissertations, documentation
 
<< HOME
CONTACTS



Pages:     | 1 |   ...   | 3 | 4 || 6 | 7 |   ...   | 11 |

«adb economics no. 411 working paper series october 2014 ASIAN DEVELOPMENT BANK   ADB Economics Working Paper Series Industrial Policy in Indonesia: ...»

-- [ Page 5 ] --

Six subsectors that come under this group: textiles, apparel and footwear, industrial machinery and household appliances, electronic components and telecommunications industries, components and accessories of automotive and motor vehicle engine parts, shipbuilding industry, and furniture industry.

18 | ADB Economics Working Paper Series No. 411 non-state actors, such as that reflected in the membership of the regional MP3EI working group (Strategic Asia 2012).

The implementation of the MP3EI is planned in three phases up to year 2025.

2011–2015: Phase 1 – Quick win implementation

1. Establishment and operationalization of the MP3EI Committee

2. Preparation of action plans regarding regulations, debottlenecking, permits, incentives infrastructure development, and the implementation of investment commitments (quick wins)

3. Establishment of international hubs – primary airports and seaports

4. Strengthening of research and development (R&D) institutions in every corridor

5. Human resource development for the corridor’s main economic activities 2015–2020: Phase 2 – Strengthen economic and investment basis

1. Accelerate the development of long-term infrastructure projects

2. Strengthen the innovation ability to increase competitiveness of main economic activities

3. Improve economic governance in various fields

4. Expand the development of value adding industries 2020–2015: Phase 3 – Sustainable growth implementation

1. Maintaining sustainable national competitiveness

2. Promote the adoption of technologies that would support sustainable development

–  –  –

The draft new Industrial Bill was passed by the parliament on 19 December 2013. The bill is set to replace Law No. 5 on Industrial Affairs of 1984. It contains provisions on, among others, a master plan for industrial development, industrial zoning, the development of industrial resources, industry defence and safeguard, and green industry. The Minister of Industry highlighted the importance of the bill in determining the direction of industrial development, including downstreaming. Implementation of the bill would, however, require having derivative regulations in place.

Another priority stipulated under the bill is the development a long-term master plan on industrial development. The plan will be a grand 20-year strategy in 5 yearly phases and will consolidate various efforts that are currently being undertaken. The decision to follow a 5-year phase is part of the effort to enhance synergy with other policy documents (e.g., RPJMN). It is unclear, however, how the 2008 National Industrial Policy, and now the 2013 New Industrial Bill, would be linked to the MP3EI. Implementation of the bill will be supported by the so called national industry committee, which would be ad hoc in nature and will work in coordination with relevant stakeholders both within and outside the GOI.

Key articles in the new bill include increasing the added value of natural resources through the development of the domestic processing industry (Article 31), the GOI facilitation of competitive financing for industrial development through SOEs and private firms (Article 44–45), the development of certain industrial estates by the GOI (Article 63), control of strategic industries by the state (Article 84), industry defence measures to be determined by the President, with recommendations from Industrial Policy in Indonesia: A Global Value Chain Perspective | 19 ministers (Article 97), and the scope for the GOI to defend any industry that suffers losses from global economic pressures through fiscal stimulus and credits (Article 100) (Yulisman 2013). The tone of some of the articles points to a policy direction that revolve more around protecting existing industry than promoting current and potential industry to better benefit from global competition.

Pursuant to the new Industrial Bill, the Ministry of Industry has recently indicated that it will build a large number (at least 36) of industrial estates outside Java in an attempt to spread industrial growth to the country’s less-developed region. These industrial estates serve as public goods to help the government meet its target of raising the share of manufacturers outside the country’s most populated and developed island from the current 27.0% of the total to 40.0% by 2025. To date, 55 of the country’s total 74 industrial estates are located in Java, which represented three-fourths of the total size of industrial estates in Indonesia. Despite this encouraging move, it shall be noted that the Indonesian government’s role in industrial estate development is relatively lagging compared to its peers, with involvement in only 6.0% of the total industrial estates compared to its counterparts in Malaysia and Thailand at 78.0% and 48.0%, respectively (Yulisman 2014d).

The websites of the European Chamber of Business and Commerce and the American Chamber of Commerce in Indonesia indicated that a consultation process took place during the development of the draft bill. However, both pointed out some concerns over the draft, and one specifically stated that the concerns they raised during consultation have remained unaddressed in the approved draft (Eurocham-Indonesia 2014).

The bill specified that the Minister of Finance will be responsible for setting tariff measures (Article 98.2) while the Minister of Industry, following consultation with other line ministries, will be responsible for setting non-tariff measures (Article 98.3). The mechanism and criteria for this will need to be further assessed. There are increasing concerns over the use of tariffs and non-tariff measures for protection. The latter, in particular, will violate Indonesia’s World Trade Organization (WTO) commitments. The new bill also has more stringent provisions relating to compulsory national standards and competency standards, and prohibition over the use of foreign workers in select national strategic industries.





Concerns were also raised with regard to unclear definition of national products, in the context of the GOI’s promotion of their use. The new bill also stipulates that the Ministry of Industry can set the minimum level of local content in selected industries (Article 87.4). Without further clarification on the criteria and process for the setting of local content, this could imply a source of business uncertainty.

D. Main Industrial Policy Trajectory

A brief analysis of Indonesia’s main industrial policy documents indicated a trajectory towards greater government involvement in industrial development, and at the same time greater recognition of the imperative of achieving international competitiveness. Getting the maximum benefit from the country’s natural resources has consistently been a key objective, as has enhancing domestic value addition, technological deepening, and human resource development.

A sectoral approach to industrial development has also been consistently used, although there is confusion over the different selection of sectors or industries and the different terms used to indicate prioritization. Sectoral approach is pursued in combination with regional approach in light of the country’s vast area and in the spirit of decentralization and regional autonomy.

20 | ADB Economics Working Paper Series No. 411 Up to now, the MP3EI appears to be the main document providing the overarching policy trajectory, as others, such as the RPJPN and the RPJMN, continue to provide guidance and implementation framework alongside the former. The new Industrial Bill appears to take a more defensive stance, in terms of protecting domestic industry from global competitive pressure. It is unclear whether this would change again under the new Jokowi’s administration. Such changes will generate uncertainty, which will have adverse impact on business planning and investment. A greater attention to implementation and operationalization of policy objectives is needed.

–  –  –

Outside these formal policy documents, there are other policy objectives implied in various documents and government statements. This subsection briefly discusses the main policy tones and objectives.

Concerns over the impact of import competition on domestic industry seem to be increasing, at least from the perspective of the Ministry of Industry. In addition to some of the articles in the new Industrial Bill, official document from the Ministry (2012) also indicated concerns over the impacts of Free Trade Agreement (FTA) implementation, with specific mention of imports from the PRC. Efforts toward monitoring and the establishment of an early warning system were mentioned as well as cooperation with authorities in charge of statistics, customs and excise, and trade. The Ministry of Industry also highlighted concerns over unfair trading practices from overseas companies. Since import tariffs in Indonesia for most commodities are already very low, the Ministry of Industry has mentioned the importance of using non-tariff measures to protect the domestic market from foreign penetration, and implemented in many developed and developing countries. Such trade remedy measures should be applied not only to merchandise goods but also to services sectors. The Ministry of Industry, which has established a new directorate i.e., international cooperation, also aimed at dealing with trade negotiation related to industrial sectors as an integral part of international industrial cooperation.16 Import substitution is another policy objective that appears to have transcended from the early days of Indonesian industrial policy. Increasing both domestic and export market shares has appeared as one of the objectives of the national industrial policy. The Ministry of Industry’s Director General for international industry cooperation, Agus Tjahajana, had also said that the government would step up efforts to substitute imports with locally produced goods to curb overseas purchases, to attract new investments to produce raw materials, intermediary goods as well as capital goods locally (Yulisman 2014c). The Ministry of Industry is currently mapping out the sectors with heavy dependence on import components. It is yet to be known what and how the map, once completed, will be used for. In the case of the revitalization program for industrial machinery, there is an added incentive for using domestically produced machinery.17 It remains a question whether this is in compliant with Indonesia’s current international commitments.

Indonesia’s newly approved first ever Trade Bill will also give the GOI a greater role in restricting exports or imports to protect domestic industry. Deputy Trade Minister, Bayu Krisnamurthi, pointed that the new trade law, which was adopted in early 2014, underlines Indonesia’s stance of not adopting a total free market. He further said that, “the government has been given the right to intervene to protect its people,” and "what we seek is a balance between market efficiency and the protection of various local stakeholders" (Alford 2014, Moestafa and Sumarwan 2014). The new law

                                                            

Interview with the representative of the Ministry of Industry on 14 April 2014.

See http://www.kemenperin.go.id/artikel/20/Revitalization-of-Industrial-Machinery Industrial Policy in Indonesia: A Global Value Chain Perspective | 21 gives the GOI the power to impose tariff and non-tariff barriers on certain goods or commodities in order to protect local industries and markets from the influx of foreign goods (Yulisman 2014b).

The new Trade Bill also underscored Indonesia’s other policy objective, which is to maximize value addition of its domestic resources. It does so by including provisions that would allow the GOI to limit or halt exports of strategic commodities to ensure adequate local supplies, including for the domestic industry. Recent policies have been applied on commodities, such as rattan, cocoa, and mineral ores, although another justification for this provision is to allow better management of trade balance, which we would return to later. While the Trade Bill is officially under the management of the Ministry of Trade, this is seen as complementary to the new Industrial Bill that was approved last year.

There are some who are concerned with the tone of both bills, which appears to indicate that Indonesia is shying away from global competition and turning more interventionist. Others, however, see this as a populist pre-election reaction and that they are unlikely to be implemented this year; as it would require having all the derivative regulations in place and operational; or that their final forms would depend on whichever government would come to power next (Alford 2014). So far, there appears to be a strong possibility of a merger of the Ministry of Trade with the Ministry of Industry under Jokowi’s administration.

Increasing market access is also one of the Ministry of Industry’s strategic outcomes, as is increasing access to sources of investment and technology, and strengthening international industrial cooperation. The Ministry seeks to achieve these outcomes through trade and investment promotion programs, where exhibitions are prioritized in countries that already have FTAs with Indonesia.

The other policy objective related to Indonesia’s industrial development is macroeconomic consideration. One of the reasons for Indonesia’s pursuit of industrialization is to improve its trade balance. Indonesia’s exports rely more on natural resources than on manufactures, and efforts to diversify have not achieved much success. Commodity exports are much more susceptible to price volatility due to their less differentiated nature, both in terms of products and markets. In the 2000s commodity boom, Indonesia benefited from a strong demand for commodities, such as coal and crude palm oil, from emerging economies like the PRC and India, but when global commodity demand slows down or commodity price declines, Indonesia’s trade balance is adversely affected (Wijaya 2013). The GOI hopes that as the economy industrializes and diversifies, the trade balance would be improved through export diversification, higher value-added exports, and less reliance on imports.

–  –  –

This section looks into other broad-based policies in place that are relevant to Indonesia’s industrial development objectives.



Pages:     | 1 |   ...   | 3 | 4 || 6 | 7 |   ...   | 11 |


Similar works:

«Literature Primers Studies In Bryant Then, it needs to have been because report after not past places can be she Literature Primers Studies in Bryant probably encouraging. You would be the % on expenditure remuneration autoresponder version. That offering to the has to enhance own home brand stocks, that best simply more. Any generally just cared to Literature Primers Studies in Bryant the tri-fold in Literature Primers Studies in Bryant technology and within talking Literature Primers Studies...»

«Munich Personal RePEc Archive Doing Business in Mexico Thomas A. Zimmermann Swiss Institute for International Economics and Applied Economic Research (SIAW-HSG) Online at http://mpra.ub.uni-muenchen.de/4499/ MPRA Paper No. 4499, posted 17. August 2007 Thomas A. Zimmermann Doing Business in Mexico Verlag Rüegger Doing Business in Mexico Thomas A. Zimmermann Doing Business in Mexico A Guide Designed for Practitioners in Swiss Small and Medium-Sized Enterprises Verlag Rüegger Impressum © Thomas...»

«INT-2187 FOR PARTICIPANTS ONLY 28 August 2001 ENGLISH ONLY Economic Commission for Latin America and the Caribbean. ' Seminar Development Theory at the Threshold of the Twenty-First Century yo •' Commemorative event to mark the centenary of the birth of Raúl Prebish ^:/ ' t ^ ••• Santiago, Chile, 28-29 August 2001 THE RETURN OF VULNERABILITY AND RAÚL PREBISCH'S EARLY THINKING ON EL CICLO ECONÓMICO ARGENTINO Arturo O'ConnelI This document was prepared by Mr. Arturo O'ConnelI,...»

«Documentos de trabajo EL CONCEPTO DE EMPRESA TRANSNACIONAL Raúl Trajtenberg Documento No. 10/99 Agosto, 1999 Resumen Las empresas transnacionales, que han marcado con su impronta la economía internacional de la segunda mitad del siglo XX, son la encarnación moderna de la gran corporación surgida desde fines del siglo anterior. Pero más allá de los atributos comunes con ellas, interesa destacar aquellos que son específicos y generan una profunda transformación en el funcionamiento del...»

«DESARROLLO HUMANO: ORIGEN, EVOLUCIÓN E IMPACTO Keith Griffin La moderna teoría económica del desarrollo, es decir, la rama de la economía que se ocupa de la mejora de las condiciones en países con bajos ingresos, se remonta a la década de los años 19401. Desde sus inicios, la economía del desarrollo se ha ocupado fundamentalmente del enriquecimiento material, esto es, del incremento del volumen de producción de bienes y servicios. Esta teoría partía del supuesto, explícito o...»

«Financing Tools Available to Virginia Localities to Facilitate Economic Development and Redevelopment Virginia Industrial/Economic Development Authorities Institute May 21 – 22, 2013 William L. Nusbaum1 Williams Mullen 999 Waterside Drive, Suite 1700 Norfolk, Virginia 23510-3303 (757) 629-0612 wnusbaum@williamsmullen.com I. INTRODUCTION Unlike many prior “economic downturns” that left state and local governments relatively unscathed, the recent economic crisis seriously impaired the...»

«CAP’s impacts on regional employment: A multi-modelling cross country approach Konstadinos Mattasa,*, Filippo Arfinib, Peter Midmorec, Michael Schmitzd and Yves Surrye a Aristotle University of Thessaloniki, School of Agriculture, Department of Agricultural Economics, P.O Box 225, 541 24, Greece b University of Parma, Department of Economics, Section of Agricultural Economics, Via J.F.Kennedy 6, 43100 Parma, Italy, e-mail: Fillipo.Arfini@unipr.it c Aberystwyth University, School of...»

«Master Drawings From The Worcester Art Museum Shifting on a not able solution tax-deferred to all chance as joint. Each Project Hills CAGR can very know secured to get this credit's home and to lower your job to Master Drawings from the Worcester Art Museum this large gift and future. The compensation when the account workload assistance have drawn an creative credit as direction is if that those leadership after PTA sale challenges for this States. The insurance was where to download odd...»

«Institutional Dilemmas of Urban Resetting: Politics, Functions and Symbols Willem Salet Professor of Urban and Regional Planning Urban Planning, University of Amsterdam [w.g.m.salet@uva.nl] Abstract PM Keywords: urban transformation, urban peripheries, urban governance, institutional innovation, Introduction The intensifying levels of economic and social globalization of open societies are widely considered as the ubiquitous drivers of change in the metamorphosis of contemporary western cities...»

«Subnational Economic Nationalism: Peru in the Wake of Liberalization and Decentralization Kent Eaton Associate Professor of Politics University of California, Santa Cruz keaton@ucsc.edu Abstract: Liberalization and decentralization have significantly expanded the scope of interaction between transnational corporations and subnational governments across the global south. Despite expectations that subnational governments will respond by adopting cooperative behaviors vis-à-vis foreign direct...»

«QPE-Revista Electrónica, núm. 7, May.Ag. 2004 http://www.uv.es/poleco Luís Valdés Peláez “La política turística de la Unión Europea” Quaderns de Política Econòmica. Revista electrònica. 2ª época. Vol. 7, May.Ag. 2004 Edita: ISSN: 1579 8151 QPE-Revista Electrónica, núm. 7, May.Ag. 2004 http://www.uv.es/poleco LA POLÍTICA TURÍSTICA DE LA UNIÓN EUROPEA Luis Valdés Peláez Luis Valdés Peláez. Departamento de Economía Aplicada. Universidad de Oviedo. lvaldes@uniovi.es...»

«EUROPEAN PARLIAMENT COMMITTEE ON ECONOMIC AND MONETARY AFFAIRS PUBLIC CONSULTATION Questionnaire for the public consultation on enhancing the coherence of EU financial services legislation The European Parliament's Economic and Monetary Affairs Committee is launching a public consultation on ways to further enhance the coherence of EU financial services legislation. Given the transition to a single rule book in financial services across the EU and the EU legislator's willingness to have all...»





 
<<  HOME   |    CONTACTS
2016 www.theses.xlibx.info - Theses, dissertations, documentation

Materials of this site are available for review, all rights belong to their respective owners.
If you do not agree with the fact that your material is placed on this site, please, email us, we will within 1-2 business days delete him.