Government Prepares Master Plan to Boost Services Sector


The Jakarta Post
The government is preparing a “blueprint” to develop the potential of the services industry and to optimize supporting infrastructure so as to increase the country’s competitiveness, Trade Minister Mari Elka Pangestu said Thursday.

“Infrastructure in telecommunications and transportation, for example, has blocked our service sector’s ability to compete in the global market,” Mari said in a seminar themed Growth and Efficiency of Indonesia’s Services Sector.

The poor quality of existing infrastructure, she said, had slowed the efforts to boost the services sector.

Mari cited the plan to build a new international port in Cikarang, West Java, as one example to cut production costs for businesses.

“The future port in Cikarang will reduce the load in Tanjung Priok port so that businessmen can [move goods] with more efficient time and [lower] cost,” she said.

Industry Minister Mohamad Suleman Hidayat highlighted the weakness of the services sector in the country in comparison to other economies in Southeast Asia.

“According to a survey by the World Bank, our service sector is worse than Australia and even the Philippines,” he said.

Hidayat believes the service sector can be the country’s leading sector. In 2008, the services sector contributed more than 47 percent of Indonesia’s GDP and absorbed more than 40 percent of the work force.

Hidayat specified poor services in telecommunications, construction, health, and education as the sectors that must be improved, as they had potential negative impacts on global market competitiveness.

One challenge to meet as soon as possible was how to cut production costs. “Indonesia has never offered more efficient production cost than competitor countries,” Hidayat said.

Hidayat highlighted new challenges to the services sector as Indonesia is now open to an influx of goods and services from other countries, because of various bilateral or multilateral arrangements, including free trade agreements (FTAs).

Business associations have partly blamed Indonesia’s weakness in facing market liberalization on the poor quality of infrastructure.

The chairman of the Indonesian Motorcycle Industry Association, said that infrastructure right across the country had remained unimproved, although the FTA had been discussed since 10 years ago.

“Good infrastructure is the key to cut unnecessary costs so that we can provide competitive prices against China’s cheap products,” the association chairman Gunadi Sindhuwinata said referring to one of Indonesia’s leading FTA partners. (bbs)