Indonesian Govt to revise industrial growth target

Posted on 24 August 2007

Industry Minister Fahmi Idris said here on Thursday the government would revise its industrial growth target due to energy and raw materials supply problems faced by industries.

"There will definitely be a revision of the target," he said when asked if various problems faced by industries at present would change this year`s economic growth target.

The target of the country`s industrial growth has been set at 7.9 percent for this year but until the first quarter the growth of new industries only reached 5.83 percent.

The minister said so far he had not seen any tendency of the growth to reach below last year`s growth of 5.27 percent although he admitted there were various obstacles hindering the growth that were beyond his office`s authority.

Several industries are currently facing gas supply problems such as those producing rubber gloves and ceramic products.

With regard to the gas supply problem, the minister said a breakthrough had to be made to increase operations in finding new wells and the production sharing pattern had also to be changed to provide incentives for industrialists wishing to carry out gas exploraitons.

"Our domestic industries can only afford to buy gas at US$5 per MMBTU while the price of gas now standd at between US%8 and US$9. That is risky. Therefore, the production sharing pattern has to be reviewed," he said.

He said pulp industries in the country contributing the fifth largest foreign exchange income to the country were now facing problems following a dispute over implementation of government regulations on illegal logging activity.

Production at two pulp industries in Riau, namely PT Indah Kiat Riau and PT Riau Andalan Pulp and Paper, had been disrupted since eight months ago after police sealed plantations that supplied raw materials to the plants.

Because of the problem the minister was pessimistic the pulp and paper companies could contribute much to growth of the industry which was set at 12.47 percent.

"In the first semester the growth of the pulp and paper industry reached five percent. Certainly its growth will be hindered. It is good if its growth in the second semester will be as high as in the first semester. I am afraid it will drop," he said.

The minister said several industries however had grown well. According the ministry`s data industries that grew above five percent in the first semester are machinery, transport vehicles and equipment (7.55 percent) and food and beverages and tobacco (7.22 percent).

Antara News, August 23, 2007

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