JAKARTA (TheInsiderStories) – In a further attempt to boost the country’s economic growth, the Industry Ministry, in collaboration with other, related ministries is stepping up efforts to lure more investment into chemical, textile and miscellaneous industries, which will ultimately help accelerate national economic growth.
“We have taken a number of strategic steps to stimulate the development of our national industry, in particular the chemical, textile and miscellaneous sectors, which have a greater opportunity to record higher growth,’ Industry Minister Airlangga Hartarto stated Monday (19/02) at a business gathering.
The Industry Minister expects the chemical, textile and miscellaneous industry sector to record growth of 3-4 per cent this year, slightly higher than last year’s 2.91 per cent figure and the 1.76 per cent achieved in 2016.
This industry, he said, contributed 4.54 per cent to the national gross domestic product (GDP) in 2017.
Minister Hartarto said his office is stepping up efforts to deepen the petrochemical and chemical product industrial sector. In the upstream, the Ministry is encouraging more investment in the petrochemical sector, which produces a naphtha cracker; its output will serve as main materials for plastics and other products, as well as raw materials for pharmaceuticals, by downstream industries.
Currently, a large portion of such raw materials is imported. Producing these products domestically will not only reduce dependence on imports but will also reduce capital outflows.
The Industry Ministry targets investment of Rp117 trillion in chemical, textile and miscellaneous industries this year, up from a realized investment of Rp94 trillion in the sector last year. Investments in this sector would thus contribute 33 per cent of total investment of Rp352 trillion in the manufacturing sector this year.
So far, three companies have announced their plans for additional investment in the petrochemical industry. These companies are PT Chandra Asri Petrochemical Tbk (IDX:TPIA) which plans to place up to US$ 6 billion by 2021; secondly, Lotte Chemical Titan, which has said it will invest US$3-4 billion to build naphtha cracker production capacity with planned installed capacity of 2 million tons of naphtha per annum.
The third company is Siam Cement Group (SCG) of Thailand, which plans to invest around US$600 million to develop a petrochemical plant to produce a naphtha cracker.
A number of pharmaceutical companies have also announced their plans to build manufacturing facilities, including PT Kimia Farma Sungwun Pharmacopia with an investment of Rp132.5 billion, PT Ethica Industri Farmasi at Rp1 trillion and PT Unilever Indonesia which plans to sink Rp748.5 billion into its project.
As for exports, Minister Hartarto claimed that Indonesia’s shoe and sports apparel industries have seen significant upgrades in recent years. This sector recorded exports of US$12.58 billion last year, up 6 per cent over 2016. Shoes and apparel have a good chance to widen their export markets in European and American countries this year.
Based on Statistics Indonesia data, Indonesia’s overall processing industry exports reached US$125 billion, representing 76 per cent of Indonesia’s total exports for the year. The manufacturing sector came to the rescue, as prices of commodity products were still relatively dull in the first half last year.
The manufacturing sector clearly shows sign of recovery, as shown by full-year data. However, Indonesia still has more room to accelerate manufacturing sector growth. Economists and industry players also believe that manufacturing can be further stimulated with more affirmative policies.