Domestic Industries Should Expand to Regional Markets: Ministry

The government has encouraged domestic industries to expand their reach into regional markets following the implementation of the ASEAN Economic Community (AEC).

According to deputy to the coordinating economic minister for international financing cooperation, Rizal Affandi Lukman, many domestic industries felt comfortable only selling inside Indonesia due to its large consumer market.

"We must change our mindset. The scope to increase Indonesian exports is still great," said Rizal in Jakarta on Wednesday, adding that the AEC should be a push for Indonesian businesses to begin exporting their products.

 

The country's current export to gross domestic product (GDP) ratio is 24 percent, while in Malaysia and Singapore it can reach up to 60 to 70 percent.

"[Indonesia's export to GDP ratio] is still very low. The products from our industry cater more to domestic consumption, not export. This can be an opportunity for our industries to increase exports to the ASEAN region and beyond," said Rizal.

Rizal added that Indonesia should take advantage of the falling price of primary commodities by increasing its industrial product exports. "We [should] increase our value-added products to substitute those primary commodities," he said.

He also said that Vietnam was Indonesia's biggest competitor in the AEC as the two countries had a product similarity index of almost 50 percent, while the similarity with other ASEAN countries was only between 20 and 30 percent.

"Vietnam has the same industrial products as Indonesia, such as textiles and footwear," said Rizal.

According to Rizal, Vietnam had been able to conduct trade free from tariffs with some countries after it became a member of the Trans-Pacific Partnership (TPP).

"Both Indonesia and Vietnam export textile products to the US. By joining the TPP, [Vietnam] receives a 0 percent tariff, while [Indonesia] still has to pay. This means that our products become less competitive," he added. 

http://www.thejakartapost.com/news/2015/12/02/domestic-industries-should-expand-regional-markets-ministry.html