Boosting the Export of Manufactured Products

ANTARA FOTO/DIDIK SUHARTONO

A container ship is anchored in the Madura Strait off Surabaya, East Java, on Saturday (30/6/2018) as a local boat passes nearby. According to the Central Statistics Agency (BPS), Indonesia\'s May exports reached US$16.12 billion, an increase of 10.9 percent from the previous month.

Exports and tourism are the government’s mainstays as the current account shows signs of structural deficit.

Some observers have said that our exports are mostly commodities, especially crude oil and gas, palm oil, coal, minerals, and other agricultural products, including spices. Therefore, many are skeptical about the prospects of exports because ultimately, our export value is greatly influenced by fluctuations in commodity prices.

Even though the opinion does contain the truth, there are also other export groups outside of the rising number of commodities, namely the export of manufactured products. Besides small items like jewelry, fertilizer, cement and tires, there are products of high value as well like cars, trains, planes and ships.

Export of automotive products

A few years ago, I traveled overland from Dubai to Abu Dhabi in the United Arab Emirates. During the trip, our car was overtaken many times by Toyota Kijang cars.

Our driver, a Pakistani, said that Toyota Kijang (there it was called Toyota Innova) was a very popular car. Toyota Innova is produced by a factory in Karawang, West Java. The same thing happened when I was standing on the balcony of a hotel in Brescia, a city east of Milan, Italy.

At that time I saw a Daihatsu Terios crossing the street in front of the hotel. Worldwide, the Daihatsu Terios car is only made in Sunter, Jakarta. Apparently, the car, made in Sunter, had already been exported to Italy as well. This really made me proud.

KOMPAS/TOTOK WIJAYANTO

Cars ready for export are parked in rows on Dec. 20, 2017 at the Tanjung Priok Car Terminal in Jakarta. The terminal transported 285,845 cars for export from January to November 2017, an 18 percent year-on-year increase.

It turns out that the export of automotive products has already reached a considerable number. For the export of built-up cars, in 2017, its development was quite encouraging, around 224,000 units with an annual growth of 11 percent.

In the previous year, car exports only reached 201,000 units. The number was among others filled by Toyota (Toyota Motor Manufacturing Indonesia / TMMIN) with 199,600 units.

Meanwhile, Suzuki exported 21,504 units of its products. Even Hyundai also exported 2,831 units. There may be other car manufacturers that exported their products.

In 2018, Mitsubishi also exported its Expander cars. Its maiden exports to the Philippines were launched by President Joko Widodo, last April. I feel confident, automotive exports in 2018 will increase more than 10 percent and reach more than 250,000 units.

According to the Central Statistics Agency (BPS) data, the value of exports of vehicles and their components currently reaches more than US$7 billion. This figure, if converted to the equivalent of the built-up car, is very likely to reach 500,000 cars or even more. This is with the assumption that the export price of a built-up car is about $14,000. Moreover, the growth of export value is quite high, namely more than 10 percent.

Export of SOEs

The export of other capital goods is widely diverse. Some time ago I visited Cilegon Fabricator, which makes cranes for ports. Its products are exported everywhere. Also we know that Bosowa exports many sky bridges, even including to Japan and Singapore.

For the exports these products, I have great admiration for many of our state-owned enterprises (SOEs). Without a lot of talk, several SOEs have been exporting to a number of countries.

By the end of May 2018, the SOE Minister brought elements of leadership of state-owned train manufacturing company PT Inka to the Philippines to sign a contract to sell four sets of diesel trains (KRD) worth $21.4 million. PT Inka has also signed a contract to supply three locomotives and 15 passenger trains worth $26.1 million. Earlier in the year, PT Inka also signed a contract to sell two sets of KRD worth $9.7 million. Therefore, this year\'s total contract with the Philippines alone is worth $57.2 million.

Previously, PT Inka exported trains to Bangladesh. Even, the company has exported freight and passenger trains to Malaysia, Singapore, and also Australia. Demands also come from Thailand as well as several African countries, such as Zambia, Senegal, Cameroon, Zimbabwe (in collaboration with Bombardier), and Nigeria.

Considerable exports have also been done by state-owned shipbuilding company PT PAL Indonesia, which also offers maintenance service in Surabaya, East Java. PT PAL has completed and delivered two units of the strategic sea lift vessel (SSV) to the Philippines. This type of landing platform dock ship was originally created by PT PAL under a contract with Daesun Shipbuilding and Engineering of Korea for the Navy, which after being completed were named KRI Banjarmasin 592 and KRI Banda Aceh 593.

KOMPAS/IQBAL BASYARI

National Development Planning Minister/National Development Planning Agency head Bambang Brodjonegoro (third right), accompanied by Budiman Saleh, the president director of state-owned shipbuilder PT PAL, takes a tour of the company’s facilities in Surabaya, East Java, on Thursday (25/1/2018). Bambang expressed his hope that PT PAL would be able to compete in shipbuilding at the international level.

Malaysia has also ordered this type of vessel from PT PAL, which they call MRSS (Multi Role Support Ship). PT PAL has also exported 50,000 tons of large ships they call the Star 50, the missile-fast vessel, tankers (among others to Italy). With their ability to build frigate ships (missile cruisers) or submarines, I am sure the company will get more and more orders from outside.

Meanwhile, state-owned aircraft manufacturing company PT Dirgantara Indonesia has completed and delivered four CN 235 MPA (Maritime Patrol Aircraft) airplanes to the South Korean Navy. Apparently, South Korea is one of the largest user of CN 235 MPA and currently has one squadron of the aircraft.

The aircraft has also been exported to several countries in Southeast Asia and Africa. Moreover, there are many more aircraft made by this state company that have been exported abroad, such as NC 212 to the Philippines and Vietnam in 2018. Meanwhile, Thailand also once bought the plane from Indonesia. By starting the commercial stage of its new aircraft, N 219, I am sure the future of state company’s exports will be brighter.

The export of combat vehicles and weapons has also been carried out by another state-owned company, PT Pindad, in considerable numbers. Anoa Panzer, which is used by the Indonesian Peacekeeping Army in Lebanon, has attracted the interest from many other countries. Singapore, Malaysia, Oman, and Brunei Darussalam bought the panzer for their military. Even, the UN also ordered several units for their peace missions.

KOMPAS/DEFRI WERDIONO

Indonesian Military (TNI) officials and representatives from the board of directors of state-owned weapons manufacturer PT Pindad look at a medium-sized Pindad tank on Oct. 9, 2017. Earlier, a cornerstone-laying ceremony was held to inaugurate Pindad’s new products and expansion project for its factory in Turen, Malang, East Java.

Moreover, legendary weapons made by PT Pindad (SS 2 and the like) also attracted the interest of many countries, including the United States, after our troops won shooting championships at international championships in Australia and in ASEAN for many years.

From this story, it turns out that many of our companies, including SOEs, are able to export products that have a high level of sophistication. For Indonesia, the ability to make these products is made possible because of the high technological capabilities of our society or the economic scale that we have.

I am confident, with these achievements; we look forward to a brighter future in the coming years.

Cyrillus Harinowo Hadiwerdoyo, Senior Member of the Center for Study of SOEs