EXECUTIVE SUMMARY

SEMINAR ON INDUSTRIAL STRATEGY IN INDONESIA


The Indonesian Economy appears to be in a hibernating stage, for almost a half decade, since the 1997 Initial Financial Crises. Hence, this is the best time for all of us to do some deep thinking, way before we act properly. To think is a rehearsed Action.

As well-known, that WEALTH is the product of Person’s capacity to THINK. Not only to think what is wrong with the previous National Economic Strategy, but it is most important to determine what the alternative Scenario in developing an Industrial Strategy for the next decade or so should be.

The recent UNIDO/United Nations Industrial Development Organization Study on the Industrial Strategy has found several interesting findings for the benefit of the Indonesian people, and the UNIDO study is a good starting point to do the Deep Thinking.

The best Scenario to develop is hinged upon three elements:

• First, the driving forces of the young demographic characteristics of the Indonesian economy should be diverted to industrialize the well-endowed National Economy.

• Second, the predetermined elements of the Industrial Strategy, hinged upon the huge domestic market of at least 200 million of population and based on the huge supply of natural resources National Endowment.

• Third, the critical uncertainty, that Indonesia is now facing is that a rich and well-endowed natural resources nation is necessarily inviting problems rather than encouraging to find a solution, simply because there are so many vested interests within the country as well as the external vested interests in our rich & well-endowed Natural Resources Economy, which has, among others, been exploiting the indigenous Indonesian well-trained professionals, without a spirit of the Voux Populi.

Thus, the industrial strategy should first, be initiated by strengthening the industrial base, from the upstream through the middle-stream till the downstream. Unlike, today’s industrial structure is hollow, such that each
Industry and each manufacture within the industry, each of them doing everything, not specializing in one field and not even focusing on one core competence.

To start up in filling the hollow parts, we need among others, the heavy equipment industry as a base industry, backed-up by the software development industry.

The software industry is based on the full-utilization of the brain. Hence, the software industry is the engine of the Value-Added creation. The value-added creation activities have to replace the present intermediary activities in Indonesia.

These are only an illustration on how the Industrial Strategy will be evolving over the next decade.