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WEAVING INDUSTRY IN INDONESIA - August 2007

The decline in the performance of the  country's  Textile and textile product (TPT) industry including weaving industry as indicated by sluggish  growth of production and sales shrinking is caused by inefficiency with machines too old to be fit for operation. The abolition of the export quota system by the United States and Europe as ruled by the WTO put the country's TPT industry face to face with giant rivals  mainly from China and India in lopsided market competition. The quota restriction had been a protection for weak market competitors like Indonesia against powerful rivals.

Around 80% the machines and equipment of the country's Textile industry have been more than 20 years in age. The country's weaving industry had 204,393 units of machines already aged more than 20 years.  Read more

CELLULAR  TELECOMMUNICATIONS INDUSTRY IN INDONESIA - June 2007

Indonesia liberalized cellular telecommunications business in 1995. Since that  year the government allows private companies to operate in cellular telecommunications business in open competition. Cellular telecommunications operation business became more attractive after the introduction of the GSM (global system for mobile communication) technology replacing the first generations of cellular telecommunication technology  used in the country  such as NMT (Nordic Mobile Telephone)  and  AMPS (advance mobile phone system).

The business expands rapidly  in  Indonesia placing the country the fourth largest market for that service in Asia after South Korea, China  and Japan. The ranks are based on the number of subscribers from year to year.  Read more
DEVELOPMENT OF OFFICE BUILDINGS IN JAKARTA - November 2007

Increase in the prices of oil in the world market causes an increase in construction cost.

The country's property industry has expanded to follow the progress made in economic development. Many property projects including high rise office buildings, shopping centers, apartment towers and hotels have lined up big streets in large cities  notably in Jakarta.

The sharp increase in the prices of oil in the past several months is feared to cause a setback to the property industry as the oil price hikes have been followed with an increase in the prices of building materials. Contractors are forced to recalculate the cost of their projects. Read more
DEVELOPMENTS OF POLYETHYLENE (PE) RESIN INDUSTRY IN INDONESIA - May 2007

Scarcity in the supply of  feedstock namely  naphtha has remained the main problem slowing development of polyethylene (PE) industry in  Indonesia in the past 10 years.  Naphtha is used as the feedstock for ethylene, which is in turn used as the main basic material for PE resin. This problem has been pointed out in a report of Joint Forum on Investment Competitiveness/SME WG Petrochemical Indonesia Japan in March 2007.  Indonesia is lagging behind Thailand, Malaysia,  and Singapore in the development of upstream petrochemical industry. Mitsubishi Chemical Japan in 2006 put Indonesia the 34th among countries having petrochemical industry in the world.

PE market in ASEAN is still highly potential  especially after the implementation of AFTA. Petrochemical demands in this region total 4 million tons  a year as against exports of 2.5 million tons. Production of petrochemical products in ASEAN grows by 6%-8% annually. Despite growing market demand, the growing  presence of new players from Middle East in this region may pose a threat to  regional industry.  Read more
PETROLEUM INDUSTRY IN INDONESIA - October 2007

Increase in oil prices feared to cause a drag on Indonesian economic development in 2008

The prices of crude oil have been on the increase lately  triggered by a number of factors including Middle East conflicts notably in Iraq and mounting tension between Iran and the West over nuclear issue, and the falling value of the U.S. dollar against euro and other major currencies.

Prediction of an increase of world's oil consumption also contribute to the pushing up the prices. The IEA predicted the world's consumption of crude oil in 2008 will rise 2.3 million barrels a day. An increase in the prices of crude oil  may cause a decline in Indonesia's  economic growth in 2008.
Read more


SUGAR INDUSTRY IN INDONESIA - September 2007

The country's sugar industry has declined  in the past decade both in production and  plantation areas  despite improvement in the past two years.

The country's sugar production in the past decade shrank by 1,8% annually on the average  and the plantations have not changed  from 340,000 hectares in the past five years, The sugar content is also declining - with productivity  down from 76.9 tons per hectares in 1990s to 62.7 tons in the 2000s. 

Hoping to improve the performance of the industry, the government has announced plan to revitalize the industry  with a production target set at 1 million tons in  2009. Read more





FOOD PROCESSING INDUSTRY IN ERA OF GLOBALIZATION - July 2007

Food manufacturing industry came to the spotlight lately after  manufactured food products from China were reported to contain dangerous chemicals. Indonesian  authorities said Chinese food products were found to contain chemicals that could cause health hazard such as formalin. Indonesia is not the only one claiming to have found the dangerous contents, which  will certainly damage  the reputation of Chinese food industry but similar reports have also come from  a number of other countries in Asia and Latin America.

Chinese food products have flooded the world market with highly competitive prices.  Indonesia, the fourth most populous country in the word  with low income is a potential market target for the Chinese cheap products. The Chinese products are highly competitive in price. Local products with basic materials mostly imported  could not meet the Chinese products in open market.  Read more


AUTOMOTIVE INDUSTRY IN INDONESIA - April 2007

Asia becoming automotive production center
World's major car makers such as Toyota, Mitsubishi, Suzuki, General  Motor, and  Ford have known no more territorial borders in expanding their operations including manufacturing operations. 

For efficiency and marketing, they established  production bases outside their countries of origin in a bid to control or have a larger share of the global market. Currently Asia has been chosen as a new production center. Many worlds' class auto makers have made Asian countries notably Southeast Asian countries as production centers.

Apart from Japan, which has long been a strong rival for the United States and Europe in auto industry, a number of other Asian countries such as China,  South  Korea and Malaysia, have  taken a big step toward a global player in the auto industry. Read more


INDONESIA ECONOMIC OUTLOOK 2008 - December 2007

The Indonesian people entered  the year 2007 with great expectation that things would be better than in 2006 when the economy was rocked by soaring oil prices  in the world market and increases in oil fuel (BBM) prices on the domestic market. The government's decision to raise the price of subsidized BBM in October, 2005  resulted in a slump  notably in the manufacturing sector in 2006.

In 2007, the economic condition improved  despite rising prices of crude oil to hit the US$ 100 per barrel level. The inflation in 2007 was kept low as the government maintained the prices of BBM, telephone and electricity tariffs. Meanwhile, Bank Indonesia cut its benchmark interest rate contributing to revival of  the business sector.

In August-Sept. 2007 the world's economy was jolted by the U.S. sub-prime mortgage crisis causing a loss of billions of U.S. dollars to a number financial agencies in a number of countries. the world. Indonesia fared better. Read More

CONSOLIDATION OF INDONESIAN BANKING INDUSTRY - March 2007

The country's banking industry has gone up and down  especially after the 1998 crisis, which caused the liquidation of many ailing  banks with a number of other  undergoing restructuring under the bank restructuring agency (BPPN).

A number of  the banks put under control of BPPN, during the 1999-2004 period, were later liquidated. Some of them were acquired by investors  and some other were combined in merger. Those banks face financial problems mainly because of large non performing loans (NPL) in 1999, the country had 164 banks but the number was reduced to 133 in 2004.

In a bid to revitalize the banking industry, the government planned bank restructuring program in 1998. In 2004, Bank Indonesia launched its  consolidation program  called Indonesian Banking Architecture (API) to be fully implemented in 2010 when all banks must have capital at least Rp 100 billion.   Read more


METAL MINING INDUSTRY IN INDONESIA - February 2007

The prices of various types of  metal have continued to scale up since 2005. Increases were recorded for almost all types of metals produced in Indonesia including  nickel,  tin, gold, silver, copper, bauxite  and iron.

In 2005, the selling price of tin averaged US$ 7,507 per metric ton, up to US$ 13,700 per ton early 2007. The prices of nickel in matte of PT INCO in the last quarter of 2006 averaged US$ 24,725 per ton (US$ 11.21 per pound) or a 148.5% increase from US$ 9,950 per ton (US$ 4.51 per pound) in the same period a year earlier. Similarly the prices of gold, silver and copper have also increased.

The rises in the prices of metal have encouraged  investment in the mining sector  after long slump earlier. State-owned tin company PT Timah Tbk, which slowed down production when the price of the metal fell, has not received a boost to increase output especially after the government cracked down on illegal smelters  and miners. Read more

DEVELOPMENT OF  MODERN RETAIL BUSINESS - January 2007

In the past decade the modern retailers have expanded rapidly. According to the association of Indonesian retail companies (Aprindo) retail business grew 10%-15% annually. Retail sales in 2006 were valued at Rp 49 trillion and this year the sales are forecast to rise to Rp 57 trillion. The condition would be more conducive for retail business with the cut in the Bank Indonesia interest rates and efficiency in production cost.

Modern retailers have a  share of 30%  with traditional markets taking 70% of the retail market value. The opportunity is still wide open for modern retailers to grab a wide share of the retail market. Modern retailers have continued to expand with new outlets springing up in large cities.  Read more



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