Creating a favorable business climate. That is the major target set by the Ministry of Industry. They provide room for continuous growth for those who have invested in Indonesia. Additionally, support is provided to enhance competitiveness in a competitive industry.

The strategic steps, especially for the electronics industry in the country, are realized through the issuance of Minister of Industry Regulation Number 6 of 2024 on Procedures for Issuing Technical Considerations for the Import of Electronic Products. "This regulation is a concrete effort by the government to create investment certainty for industry players in Indonesia, especially in producing electronic products domestically," said Priyadi Arie Nugroho, the Director of Electronics and Telematics Industry (IET) at the Ministry of Industry, in Jakarta, on Monday, 8 April 2024.

This import flow regulation is a follow-up to the President's directive on the trade balance condition of electronic products in 2023, which indicated a deficit. Therefore, based on proposed considerations and the domestic industry's capabilities, Minister of Industry Regulation 6/2024 specifies 139 electronic fare lines, with details of 78 fare lines applied through Import Approvals (PI) and Surveyor Reports (LS) and 61 other tariff lines applied solely through LS.

The 78 fare lines include some products, such as air conditioners, televisions, washing machines, refrigerators, fiber optic cables, laptop computers, and several other electronic products.

Import Commerce Procedures

Import commerce procedures for electronic products are new and have never been implemented. Therefore, the issuance of this electronic product import commerce policy  does not imply that the government opposes import but instead seeks to maintain a favorable business climate for domestic industry, especially for products already manufactured domestically.

Referring to Minister of Industry Regulation 6/2024, by implementing these import commerce procedures, domestic manufacturers expect to capture the electronic products demand, boosting capacity, and diversifying product types. Meanwhile, Electronic Manufacturing Services (EMS) or Original Equipment Manufacturers (OEM) can cooperate with international brand holders who do not yet have production lines domestically.

On the other side, particularly for importers, there is certainty in the distribution and/or sale of imported goods domestically.

According to the Director of Electronics and Telematics Industry (IET), based on National Industrial Information System (SIInas) data in 2023, air conditioners production capacity was 2.7 million units, with actual production around 1.2 million units. This means the production utilization was only 43%. Meanwhile, based on surveyor report (LS) data, the import of air conditioner products in 2023 reached 3.8 million units.

Therefore, it is hoped that this import regulation will promote the use of domestic air conditioner production. "This Minister of Industry regulation has been well received by domestic electronic manufacturers. This is evidenced by several official letters received by the government from domestic manufacturers' associations expressing their support," concluded Priyadi.

Daniel Suhardiman, Secretary General of the Electronic Entrepreneurs Association (Gabel), stated that the issuance of Minister of Industry Regulation 6/2024 must be viewed through the perspective of national interests. Gabel, as an association of electronic manufacturers, welcomes it and has great hopes that the regulation can be consistently enforced.

"Indeed, the issue of competitiveness of domestic industry cannot be solved solely through import commerce; there are still other complex issues such as the weakness of downstreaming raw material industries and core components," said Daniel.

However, downstreaming activities will not occur without the growth of upstream industries to the level of economic scale for downstream industries. Therefore, with the issuance of Minister of Industry Regulation 6/2024, Gabel hopes that upstream industries will grow rapidly, thus triggering integrated downstreaming.

"Of course, the government faces a significant challenge in implementing this regulation, which requires the support and input of all stakeholders for a smooth implementation. Even if there are operational problems, they should be corrected together rather than questioning the essence of the regulation," added Daniel.

Fiber Optic Cable

According to Noval Jamalullail, Chairman of the Indonesian Cable Factory Association (APKABEL), the implementation of Minister of Industry Regulation 6/2024 is the best solution to support the domestic cable industry, especially fiber optic cable manufacturers. "Because this will revive the production of domestic fiber optic cable industry to actively meet the national needs for building telecommunication infrastructure and internet networks throughout Indonesia," he explained.

Furthermore, Noval said, this Minister of Industry regulation provides new optimism for the development of the domestic fiber optic cable industry. Especially since the capacity and capability of the fiber optic cable industry in Indonesia currently are sufficient and can produce all types of fiber optic cables, from small to large sizes. Whether it is for indoor use, aerial and underground, duct, and submarine cables. "The total capacity reaches 15 million ScKm (Kmfiber)," he added.

The large capacity and capability are owing to the presence of several global investors from China, Korea, and Japan, who have built several fiber optic cable factory facilities in Indonesia in the last eight years. However, this capacity is only utilized with production occupancy below 50% of installed capacity.

All fiber optic cable processes, including coloring, tubing, stranding, armoring, sheathing, or jacketing, are already 100% done domestically. "Because fiber optic cable products are a unified process, so there is no assembly process," emphasized Noval. (*)

Writer: Dwitri Waluyo
Editors: Ratna Nuraini/Elvira Inda Sari/Siti Chodijah
Translator: Ratna Puspa Merdika