Countries of the World/COUNTRYS.BIN/dp/0172/01726.txt

Text File | 1991-06-25 | 37KB | 592 lines

$Unique_ID{COW01726}
$Pretitle{239}
$Title{Indonesia
Chapter 3D.   Manufacturing and Industry}
$Subtitle{}
$Author{Riga Adiwoso-Suprapto}
$Affiliation{HQ, Department of the Army}
$Subject{percent
government
foreign
indonesia
total
exports
oil
major
facilities
indonesian}
$Date{1982}
$Log{Plywood*0172601.scf
Helicopter Weather Station*0172603.scf
Family-Run Supermarket*0172607.scf
}
Country:     Indonesia
Book:        Indonesia, A Country Study
Author:      Riga Adiwoso-Suprapto
Affiliation: HQ, Department of the Army
Date:        1982

Chapter 3D.   Manufacturing and Industry

     In the manufacturing sector the characteristics of economic dualism were
especially evident. Of some 1.3 million manufacturing firms in 1974, nearly
96 percent employed fewer than four people, and over 99 percent had fewer than
20 employees. Although the total number of enterprises has probably doubled
since then, there was no evidence in 1982 to suggest that the gap in
productivity between the small number of large-scale manufacturers and the
vast number of small firms had narrowed. Some modern firms were 40 times
more productive per worker than small-scale firms and utilized the latest
imported technology. Manufacturing enterprises were concentrated on Java,
where better transport and electric-power facilities, along with good access
to official agencies, attracted most domestic and foreign investors. Tax and
other kinds of incentives given to locate on the Outer Islands had failed to
reverse this bias toward Java, and industrial congestion and pollution were
becoming problems in such cities as Jakarta, Surabaya, and Semarang.

     The most rapidly expanding industries were those producing fertilizer,
cement, and chemical products essential to production in other economic
sectors (see table 11, Appendix). After the expansion of the petrochemical
fertilizer plant at Gresik in 1980, the country was able to produce all of the
major kinds of modern fertilizers in its state-owned facilities. Only urea
fertilizers, however, were produced in sufficient quantities, and the
completion of urea-producing facilities at Aceh in Sumatra and on Kalimantan
in 1982 and 1983, respectively, would continue the surplus for export. The
production of cement, chiefly portland cement, neared 6 million tons in 1980;
total capacity, following the addition of two new plants, rose to 8.6 million
tons. The capacity to produce petrochemicals, essential to the synthetic
textile and other industries, was to be significantly improved with the
construction of a large olefin plant at Lhokseumawe in North Sumatra Province
and a large aromatics plant at Plaju in South Sumatra Province. The
improvement of the nation's crude oil refining capacity was essential for the
supply of feedstock to these plants.

     The production of manufactures that utilized chemical inputs, such as
paper and tires, has also grown. The capacity of the existing 29 paper mills
in 1980 reached 345,000 tons, and expansion was taking place at sites in
eastern Java. Heightened demand for motor vehicle tires stimulated the
nation's highly protected private producers to expand capacity to almost 6.8
million tires. The government had strong ambitions to build a large plywood
industry capable of dominating the world market, making sawn log exports for
timber concessionaires dependent upon the latter's construction and operation
of plywood processing plants. There were only 20 plywood plants in operation
in 1979, but in late 1982 some 45 facilities were in operation or under
construction.

     The metal and machinery industry was in the early stages of development,
and the premier showcase project, the Krakatau Integrated Steel Mill in
Cilegon, has operated at a loss while construction at the plant has been
delayed. The total annual capacity envisaged for the completed mill was 2.2
million tons, which would not be achieved until around 1990. The total cost
for the project, including a massive investment in infrastructure, was over
US$2 billion. Downstream demand for metal products, which were also forged
at a number of small steel manufacturers, came from the automotive and
shipbuilding industries. The automotive industry, however, relied on imported
components for the most part, and shipbuilding capacity was growing slowly
as the construction of new dry-docking facilities at Cilacap proceeded.

     Unlike strategic industries, such as basic metals, cement, and chemicals,
light manufacturing was predominantly controlled by the private sector. The
most important light manufacturers were textile products, which have made the
country self-sufficient in fabrics. Current development concentrated on
garment manufacturing, much of the output for export, and on the development
of fiber making and spinning. Other light manufactures, such as electronic
products, were growing rapidly but from a small base.

[See Plywood: Indonesia is promoting the export of plywood rather than of
timber. Courtesy of BKPM/National Development Information Office]

Utilities and Construction

     Electricity accounted for only 7 percent of the total commercial energy
utilized in 1977, but as industry developed and efforts to construct power
lines in the suburban and rural areas progressed, this share was rising. The
Department of Mines and Energy was responsible for supervising all electricity
utilities, which included the state-run national power network, captive plants
installed at industrial facilities, a few small municipal corporations, and
some cooperative producers in the countryside. In 1980 more than
three-quarters of the public-installed capacity of 2,662 megawatts were
thermal facilities utilizing oil, natural gas and coal; the remainder were
hydroelectric facilities.

     The per capita consumption of electricity in 1981 was low, about 76
kilowatt-hours, and only 12 percent of all households on Java, 9 percent on
Sumatra, 12 percent on Kalimantan, 10 percent on Sulawesi, and 2 or 3 percent
on the remaining islands were connected. Investment plans for the 1980s
projected the total installed capacity on Java to rise from 1,891 megawatts
in 1981 to 6,460 megawatts in 1984, while the Outer Islands would increase
from 719 megawatts to over 3,100 megawatts.

     The government's desire to limit domestic oil consumption and the high
cost of coal-fired plants necessitated the development of the nation's
substantial hydroelectric resources, roughly estimated at 31,000 megawatts,
chiefly on the Outer Islands. In 1982 a major hydroelectric facility, having
an installed capacity of 600 megawatts, was being completed as part of the
industrial complex at Asahan. Another facility, having an installed capacity
of 700 megawatts, was being built at Saguling, and detailed field studies
were being conducted at three sites with a potential for 800 megawatts each.
About 26 miniature hydroelectric stations were scattered about the country,
totaling only four megawatts, but a construction program to build another 22
megawatts of capacity, chiefly on the Outer Islands, had begun.

     Researchers have identified 17 geothermal fields, having a heat value
of greater than 100 megawatts each, on Sumatra, Java, Bali, Flores, and
Sulawesi. In 1982 a 30-megawatt geothermal station was being constructed at
Kamojang on Java, and an agreement had been signed to develop a 300- to
475-megawatt facility at Salak. Most geothermal sites were in remote areas.
Indonesia had no nuclear power facilities, although a recent study proved
the feasibility of a 640-megawatt reactor. One 50-megawatt experimental
reactor was recently ordered by the government.

     Potable, piped water was available to only 40 percent of the urban
population and to about 18 percent of the rural population in 1981, and
there was a high incidence of waterborne parasitic disease (see Health, ch.
2). Government programs previously concentrated on the improvement of urban
facilities, but in Repelita III efforts were directed to provide safe water
to the residents of som