VIVAnews - The Indonesian Awakening Team viewed the government policy aiming at anti deindustrialization as incomprehensible. In fact, slowing down deindustrialization can be facilitated by reducing government spending.
According to Head the Indonesian Awakening Team Henry Saparini, the accelerating deindustrialization which would likely increase in 2009 may be prevented by, among others, cutting back spending on raw materials and energy, increasing capital, and decreasing costs for employment.
"The government chooses to reduce employment costs through joint decree of four ministers. In fact, the cost of employment is less than 10 percent of the total production cost, which makes it ineffective," Saparini said on Monday, Dec 29.
Saparini went on to say that the government's capability in energy sources and capitalization will have greater effect than cutting the cost of employment. Production costs in the energy sector (fuel and electricity) affect industrial costs by 45 percent.
"Taking into account the falling world oil price, if the government resets fuel prices before there is an increase, the effect would be significant to industrial costs," said Saparini.
Saparini said that the current decrease in fuel prices will open the way for the government to remove subsidized fuel.
The government could also increase domestic capital to decelerate deindustrialization. There are still very few policies which side with the public to stimulate the real sector.
"With the current situation, countries are putting forth all efforts to protect the real sector so as to become more competitive as well as protecting the domestic market," said Saparini.
Translated by: Bonardo Maulana Wahono
