$Unique_ID{bob00242} $Pretitle{} $Title{Indonesia Manufacturing Industry} $Subtitle{} $Author{Department of Information Republic of Indonesia} $Affiliation{Embassy of Indonesia, Washington DC} $Subject{industries export industrial value million volume small-scale thousand commodities increase see pictures see figures see tables } $Date{1990} $Log{See Manufacturing Wood Frames*0024201.scf See Table 20.*0024201.tab See Table 21.*0024202.tab } Title: Indonesia Book: Indonesia 1990 an Official Handbook Author: Department of Information Republic of Indonesia Affiliation: Embassy of Indonesia, Washington DC Date: 1990 Manufacturing Industry [See Manufacturing Wood Frames: Courtesy Embassy of Indonesia, Washington DC.] Manufacturing plays a more significant role in the economy. In 1988 it accounted for 18.4% of gross domestic product at constant market prices and its growth rate was 13.0% at 1983 constant market prices. The additional number of workers engaged in this sector during the period 1984/85 to 1988/89 totalled 2.4 million people of which 1.2 million work in small-scale industries. Based on the latest data collected by the 1986 National Economic Census and other surveys, the industrial sector is estimated to grow at a rate of 13.2% on a yearly average during the period 1984-1988, surpassing the target of 9.5% on annual average set for the period of the REPELITA IV, 1984/85-1988/89). Deregulation measures -- imposed since 1983 on finance and monetary, investment, export and import as well as in the field of manufacturing industry -- have brought beneficial effects on production activities and the product's competitive power both in domestic and foreign markets. The added value of manufacturing industries covering multifarious industries, basic industries, small-scale industries and petroleum and natural gas refineries industries in 1988 amounted to Rp 18,339.9 billion against Rp 9,896.4 billion in 1983. Meanwhile, exports of industrial products in terms of value, volume and amount of commodities also showed an encouraging increase. The actual export value of the 381 economic commodities in 1988 totalled Rp 9,387.9 million against only 181 commodities valued at Rp 3,209.2 million in 1983. In terms of value, contribution of the manufacturing industry to non-oil and-gas exports and the overall exports rose impressively from 64.2% and 15.2% in 1983 to 81.4% and 48.8% respectively in 1988. It was also partly caused by the application of shrewd policies on export and the diversification of exports market. More encouraging is that some products of the small-scale industries such as brooms, crispy chips made of gnetum gnemon seeds (emping melinjo), brown sugar, and some products of large and modern industries such as steel, automobile, highly pressured-tanks, reactors, etc. have been able to enter the international market. Development in the field of basic industries covering basic chemical, machinery and basic metal as well as basic industries grouped to multifarious industries such as textile synthetic fibre, has also indicated a more favorable tendency. It is reflected by the 1984-1987 basic-industry projects numbering 135 with a total investment of Rp 6.9 trillion, by which it can save US$1.2 billion of foreign exchange reserve per annum. Such rapid development in the industrial sector is indeed closely related with investment development in this sector during the last five years. Investment value of industrial projects excluding the small-scale industries under domestic and foreign investment schemes as well as the non-domestic and foreign investment scheme up to 1988 totalled Rp 12,360 billion plus US$4,240 million against the amount of only Rp 2,330 billion plus US$1,112 million in 1984. The food processing industries, textile, construction material, timber and rattan processing industries of the multifarious industries group, and industries of rubber cellulose, organic and inorganic chemistry, and basic metal industry as well as machinery industry along with that of rubber gloves and sports shoes obtained a large portion of investment. Parallel with the rapid growth of this sector, the nation's capability of mastering technology in the context of improving her autonomy in the industrialization process has been continuously promoted and encouraged. Studies and developments which have been conducted up till now are also showing positive results. The nation's ability in technological application including sophisticated modern technology which is important in the framework of enhancing the quality of products, efficiency and productivity as well as preventing industrial pollution, has been constantly improving. In addition, promising progress has also been noted in developing effective technology for the development of smallscale industries. Meanwhile, the mastery of design and construction technology and industrial engineering in the making of machines, equipment and building of factory by the Indonesian engineers has also been improving. Indonesian engineers are now capable to construct modern plants such as cement, paper-mill, fertilizer and steel plants with application of the sophisticated modern technology. MACHINERY AND BASIC METAL INDUSTRY The development of the group of machinery and basic metal industries during the last five years indicates a considerable improvement, both in terms of volume and kind of production. The export volume of the machinery and basic metal industries group, in 1988/89, totalled 1,948.5 thousand tons, meaning an increase by 94.2% compared to that of the previous fiscal year. Compared to that of 1983/84 the increase is about 907.64%. Meanwhile, the export volume of basic metal industries in 1988/89 noted an increase of 28.5% compared to that of the previous fiscal year, that of machinery industries rose significantly by 1,055.4%, electric and electric machinery industries increased by 699.7% and export of land and air transport equipment industries rose by 310.0%. The export value of this group also rose by 159.3% during the last five years. In 1988/89 it amounted to US$686.88 million, an increase by 24.6% compared to that of the previous fiscal year which derived from the basic metal industries 36.5%, machinery industries 231.0%, electric and electric machinery industries 281.8%, and equipment of land and air transport industries 54.8%. The increase in exports of machinery and basic metal industries products occurred to export commodities such as steel-iron, steel plates, concrete steel, wire stalks, steel pipes, boilers and offshore drilling rigs. BASIC CHEMICAL INDUSTRY Development of the basic chemical industry during the period of REPELITA IV (1984/85 to 1988/89) also shows a steady rise as reflected by the number of companies which grew from 160 in 1983 to 341 in 1988 and the kinds of commodities which increased from 39 to 71. Included in the additional commodities are among other things long fibre pulp, fibre pulp, newspaper print, cement sack paper, nylon tyre-cord, methanol, basic material for pesticide, phthalic anhydride, maleic anhydride, sorbitol, formylate acid, calcium carbide, polystyrene aluminum fluoride, PTA and DOP. Both the export volume and value of the basic chemical commodities continue to show a promising increase during the last five years. The export volume of these commodities grew by 795.0% from 598.0 thousand tons in 1983 to 5,352.7 thousand tons in 1988, while its value reached US$585.3 million in 1988 against US$75.66 million in 1983. Of this amount cellulose and rubber industries accounted for about 30.3%, the agro-chemical industry 29.4%, inorganic chemical industry 22.3% and organic industry 18.0%. In 1988, the production of some agro-chemical industries declined, while those of cellulose and rubber industries showed an increase. Production of organic chemical industries indicated a rise, especially that of sorbitol which increased by 110.5%. Meanwhile, the production of inorganic industries in general also noted encouraging increase, while some of them have fluctuated from one year to the other during the period 1984/85 to 1988/89. However, during the same period various products of inorganic industries scored an increase of over 50%, namely that of chloride acid rose 52.7% on yearly average, chloride zinc 98.5%, calcium carbonate 67.4% and salt grew up by 53.9%. MULTIFARIOUS INDUSTRIES The development in the field of multifarious industrial group showed a rise both in volume and type of production during the period 1984/85 to 1988/89. The types of commodities in this group which gained a substantial increase were cooking oil, artificial sweetener, canned fruits and vegetables, fodder, weaving yarn, garments, cassette tapes, audio cassette tapes, light bulbs and fluorescent lamps, sports shoes, plywood, particle boards, cement tiles, concrete electric poles, leather shoes, and processed rattan. The export volume of this group in the final year of REPELITA IV (1988/89) totalled 10.7 million tons which is an increase by 130.75% compared to that of the final year of REPELITA III (1983/84) amounting to 4.6 million tons. At the same time, the export volume of food industry rose 16% on yearly average, textile industry 32.1%, chemical industry 7.8%, electric and metal industries 190.4% and building material and general industries 19.1%. Correspondingly, the export value of this group increased by 26.8% on yearly average to reach US$6,097 million in 1988/89. The export value of food industrial products grew on an average of 30.4% per annum, textile industrial products 42.6%, chemical industrial products 14%, electric and metal industrial products 99.3%, and building material and general industrial products 30.4%. In 1988/89 the production of food industries, textile industries and chemical industries except tooth paste and diazo paper commodities showed an increase compared to that of 1987/88. So did the production of electric and metal industries and that of building material and general industries. Particularly in the production of building material industries, the plywood, decorative plywood and marble rose at an annual average of 23.1%, 15.6% and 23% respectively. The aforementioned data prove that industries which experienced steady increase during the period of REPELITA IV are those which process and utilize domestic raw materials such as the plywood, cement tile, rattan processing, canned fruits and vegetables, canned fish, and cigarette industries. SMALL-SCALE INDUSTRIES The development of small-scale industries aims at equalizing employment and job opportunities. It is expected that the development can strengthen the national industrial structure and help augment the state's foreign exchange earnings through increased exports of non-oil and -gas commodities. As mentioned earlier, this field of industries accounted for 1.2 million out of 2.4 million or 50% of the total additional workers absorbed during REPELITA IV. It marks that this field of industries is remarkably potential in easing the problem of unemployment faced by the nation. Realizing this the government has indeed launched sustained efforts to develop and promote the small-scale industries. Development of small-scale industrial centers is encouraged, and entrepreneurs are given various facilities including soft-term credits. Up to the final year of REPELITA IV, cumulatively there were about 6,092 small-scale industrial centers, consisting of 1,758 food industrial centers, 1,171 textile and leather centers, 1,147 chemical and building materials centers 1,377 multi-crafts and general centers, and 639 metal industrial centers, which had been developed and promoted. In addition, in developing and promoting the small-scale industries, related programs has also been applied, which have shown promising results both in terms of participating companies in the program and the selling value of the products. Since 1986, the state-run companies' purchase of products manufactured by small-scale industries has been showing an increasing trend. In 1986 the amount was Rp 36.0 billion (0.4% from small-scale industries' total production value), and this rose remarkably to Rp 3,473.4 billion (38.4% of total production value) in 1987 which went up again to Rp 4,483.5 billion (45.2% of total production value) in 1988. In an effort to further promote and advance small-scale industries, every year the President of the Republic of Indonesia awards the "Upakarti" medal reward to those who have shown outstanding merit and dedication in promoting and advancing the small-scale industries. In general the number of companies and workers absorbed in these industries during the last five years also showed a stable increase. There were 1,554.9 thousand small-scale industrial units with 4,422.8 thousand workers in 1983, and these figures went up to 1,774.0 thousand and 5,618.8 thousand respectively in 1988. This means that the industrial units added by 219.1 thousand and the workers 1,196.0 thousand during the last five years. Both the volume and value of exports of small-scale industries' products show a heartening increase from one year to another. In 1988, the export volume totalled 702.4 thousand tons worth US$956.0 million, folding eight times in terms of volume and seven times in terms of value compared to those of 1983. This was the result of a sharp seventy-sixth fold increase of the export volume of food industrial commodities. In terms of value, large contributions originated from export commodities of crafts and general industries, followed by textile and leather industries, food industries, chemical industries, and building material industries. The export volume of food industries' commodities in 1988 reached 550.2 thousand tons worth US$100.9 million, which rose 19.3% in terms of volume and 44.3% in terms of value compared to those of 1987. It means the export of food industries' commodities during the period 1983-1988 grew at an average of 138.6% in terms of volume and 54.2% in value. Textile and leather exported in 1988 increased by 5.6 thousand tons worth US$61.6 million, which rose by 28.3% and 31.9% respectively compared with those of 1987. But for the last five years the export volume of the commodities rose 22.3% and its value rose 35.6% averagely each year. In the field of chemical industries, its exports volume and value increased by 18.5 thousand tons (22.2%) and US$36.0 million (59.2%) respectively in 1987 to 101.7 thousand tons and US$96.8 million each in 1988. During the period of 1983 to 1988, the export volume and value increased 14.0% and 27.7% on yearly average. In 1988, the export volume of commodities from crafts and general industries reached 25.1 thousand tons valued at US$503.8 million which rose by 6.6 thousand tons (35.7%) and US$154.4 million (44.2%) compared with those of the previous year. Meanwhile, exports of this industrial field during the period 1983 to 1988, particularly in the last two years, increased significantly by 14.6 thousand tons and US$462.6 million which went up 19.1% and 65.0% on yearly average respectively. Its contribution to the total export of manufacturing industries showed also a considerable rise from 30.1% in 1983 to about 52.1% in 1988. [See Table 20.: The Volume of Exports of Small-scale Industrial Products, 1987-1988 in tons] [See Table 21.: The Value of Exports of Small-scale Industrial Products, 1987-1988 in thousand US$]