INFRASTRUCTURE DEVELOPMENT: Government Committed to Prioritising Local Content

June 11, 2015, Bisnis Indonesia, Page 7, Section: Infrastructure

JAKARTA – Engineers have expressed optimism that the momentum of massive infrastructure development over the next five years will also increase the growth of national industry and economy, in line with the government’s commitment to prioritising local content in infrastructure projects.

Chairman of Indonesian Engineers Association, Bobby Gafur Umar, said that, all this time, engineers had been worried that the planned development for the next five years would not have any significant impact for the domestic industry, if the level of local content in these projects remains minimal.

However, according to him, the government has given a positive signal through a commitment to optimise the utilization of local content, so that, it is believed, this will be able to spur the national economy to move faster. Bobby said that, with optimisation of the domestic industry, the value of imports can be suppressed. In addition, the growth of employment opportunities will also be higher. 

“The fundamentals of our economy will improve. Skilled human resources will also be honed and our engineers will become the host in their own country,” he said, Wednesday (10 June).

In a Limited Cabinet Meeting in Jakarta, Tuesday (9 June), President Joko Widodo has given directives related to some of the strategic plans concerning optimisation in the utilisation of local resources in infrastructure projects, which the government is currently pushing hard.

Industry Minister, Saleh Husin, said that the government is committed to making the momentum of infrastructure development an opportunity to stimulate national industries, economic progress, and national self sufficiency. According to him, it is time for increased use of domestic products to be pursued, considering that there are now a lot of industrial products that can already be produced by domestic factories. All this time, infrastructure projects have frequently relied more on foreign products, whereas those products are already in production in the country.

“I believe that our industrial establishments already have the ability to produce a lot of important components for such projects. There is no more need to import them; just a waste of foreign exchange,” he said.

To that end, said Saleh, there needs to be detailed mapping of the domestic industries’ ability to embrace this momentum. This is to ensure that the domestic industries are able to meet the requirements of infrastructure projects to be undertaken. 

The Minister of Industry said that one of the government’s efforts to realise the commitment is to increase the capacity of State-Owned Companies (BUMN) in the industrial sector. Ministry of Public Works and People’s Housing, according to him, requires 1,000 units of excavators that will be sought to be met by PT Pindad. “Currently, the prototypes of heavy equipment that are ready to be launched are being made. This June or next month, they will [be launched].”

Saleh explained that his ministry has prepared a memorandum of understanding with the Financial and Development Supervisory Agency (BPKP). This memorandum of understanding pertains to audit on the level of domestic content (TKDN) by BPKP to agencies and state-owned enterprises (BUMNs) that use the state budget.

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