JAKARTA - The Indonesian
electronics federation (Gabel) has warned the government
of possible relocation of electronics factories from the
country because of declining competitiveness of the
domestic industry since the financial crisis of 1997-98.
Gabel chairman Rachmat Gobel said a number of
multinational companies plan to move their production
facilities from Indonesia to other countries where the
conditions are more competitive.
Gobel said
Indonesia's electronics industry is still facing too
many difficult hurdles, including legal uncertainty,
frequent labor strikes and rampant smuggling. The
problems have weakened the domestic electronics sector,
he said, adding that being a large market, Indonesia is
attractive but the problems outweigh that advantage for
an investor.
Gobel pointed to a recent decision
by the Japanese-based multinational company Aiwa to
close its factories in Indonesia, saying that should
serve a lesson for the country.
"The decision
was part of global strategies of Aiwa and Sony, but we
believe the condition of being not conducive in the
country contributed to prompting the decision," he said.
Another Japanese electronics giant, Matsushita,
which is the principal company of the Gobel Group also
plans to relocate one of its production lines from
Indonesia.
"We would seek to convince Matsushita
to stay but we are not so sure they would hear us,"
Gobel said.
Gabel secretary Adhi Sukmono said
indications of relocation of more electronic factories
from Indonesia are more obvious from the growing imports
of electronic products supplied by affiliated companies
in other countries such as Singapore.
Multinational companies are more interested in
turning their affiliates in Indonesia into mere sales
agents providing after-sales service, he said.
