Indonesian Electronic Exports Go To Non-traditional Markets

Director of the Electronics and Telematics Industry at the Ministry of Industry, R. Janu Suryanto. (Photo: Ministry of Industry)

JAKARTA - The Ministry of Industry (Kemenperin) is encouraging the domestic electronics industry to be able to expand its export market, including to non-traditional countries. This strategic step is in line with the government's determination to immediately improve the trade balance deficit so as to strengthen the structure of the national economy.

"Export activities are believed to have a positive impact on the country's economy. Therefore, efforts are needed to increase capacity and capability in the industrial sector, ”said Director of the Electronics and Telematics Industry of the Ministry of Industry, R. Janu Suryanto during the launching of the first export of AC products from PT Panasonic Manufacturing Indonesia (PMI) to Nigeria in Jakarta, Wednesday, February 19.

On this occasion, Janu conveyed that the Ministry of Industry as the industrial supervisor gave his appreciation to PT PMI for realizing its commitment to expand the export market and continue to add new shipping destinations, especially for AC products. This indicates that the country's industrial production is able to be competitive in the international arena.

"The development of the AC business that can compete in the global market and can enter non-traditional markets, also demonstrates PT PMI's commitment to making Indonesia a production base for air conditioners in the ASEAN region," he explained.

It should be noted, PT PMI has successfully relocated the production of AC type 2 PK and 2.5 PK from Malaysia last year. Air conditioning products exported to Nigeria are 1 PK to 1.5 PK and 2 PK based on R32 refrigerant.

"The government asks companies with high import values to immediately localize their factories in Indonesia, not to import them in intact conditions," said Janu. The government is also attracting investment, especially the industrial sector that produces import substitution products.

Director of PT PMI Daniel Suhardiman said, Panasonic Gobel will continue to carry out its mission to contribute to Indonesia, which is carried out by developing domestic businesses through increasing production and sales of its products. This effort is expected to improve the welfare of the wider community and actively expand the export market.

"Of course, this export is something to be proud of. Besides being able to increase foreign exchange, the AC products we export also use the Panasonic brand and are listed as made in Indonesia," he said. According to Daniel, exports to Nigeria could be a momentum to open market doors in Africa.

"Along with the increasing competition in the global market, PT PMI's AC production is always innovating and consistently developing domestic industries including the small and medium industrial sector (IKM). Currently, the local content for AC produced by PT PMI has reached 40 percent, and will continue to be increased, "he explained.

So Leverage

The Ministry of Industry is optimistic that the electronics industry has the leverage to boost the value of national exports, especially the manufacturing sector. Moreover, the electronics industry is one of the sectors that has received priority development in accordance with the implementation of the Making Indonesia 4.0 road map.

"For example, the home appliances industry in Indonesia is getting stronger, and it remains only to deepen the manufacturing structure through increased investment," said Janu.

This target will be easily achieved if it is supported by the use of the latest technology and competent industrial human resources (HR). The Ministry of Industry noted that the overall export value of electronic and telematic products reached US $ 7.8 billion throughout 2019. The 10 main destination countries, including Singapore, the United States, Japan, Germany, Vietnam, Hong Kong, Malaysia, China, Thailand , and the Philippines.

"The increase in the export market will certainly increase the amount of production in the country which can also encourage an increase in the competitiveness of its products," added Janu. Therefore, the government is currently serious in terms of encouraging export activities and industrial investment.

PT PMI's first export of AC products to Nigeria will be released in Jakarta, Wednesday 19 February. (Photo: Ministry of Industry)

Various business policy policies were issued to support this, as well as to remove regulations that were considered difficult. "For example, in the not too distant future, we will cooperate with the Ministry of Trade to carry out enforcement operations in accordance with statutory regulations on goods that are not in accordance with SNI," he explained.

In addition, regarding policies to support the implementation of industry 4.0, the government has taken the initiative to encourage the growth and development of competent human resources. In addition, it will spur R&D activities in the country.

"In this case, the government facilitates the provision of tax incentives in the form of super tax deduction which provides a gross income discount of up to 200 percent for vocational-related expenses and up to 300 percent for R&D-related expenses," said Janu.

This fiscal incentive shows that the government is focused on developing the capacity of the national manufacturing industry to make it more globally competitive. According to Janu, the very dynamic characteristics of the electronics industry have led to the emergence of product innovations which are also getting faster and require industry players to keep updating their products. Some examples of rapid innovation include PCB layer technology, rechargeable batteries and semiconductors.

"Mastery of technology in these fields can make an industry a market leader so that many international scale companies are competing to be able to master the technology first," he concluded.