1. Concept and Objectives Industrialization
In the history of economic development, the concept of industrialization originated from the first industrial revolution in the mid 18th century in England, which is marked by the discovery of a new method for the request, and the discovery of new methods for spinning and weaving cotton that creates specialized in the production, as well as increased productivity of factors production used. Afterwards, innovation and new discoveries in the processing of iron and the steam engine, which encourages innovation in manufacturing, among others, steel, railways and steam ships. after that then followed the second industrial revolution in the late 18th century and early 19th century with various teknonologi development and innovation. After World War II, began to appear new technologies such as mass production system by using assembling lines, electricity, motor vehicles, the discovery of a variety of synthetic goods, and the technological revolution of telecommunications, electronics, bio, computer, and use of robots. All these developments change the pattern of industrial production, increase the volume of world trade, and accelerated the process of industrialization in the world. (Pangestu and Aswicahyono, 1996)
Economic history of the world shows that industrialization is a process of interaction between technology development, innovation, specialization of production and trade between countries, which in turn is in line with rising incomes push strukttur economic changes in many countries, from which was based on agriculture to one based on industry. It can be said that especially the combination of the two boosters from the aggregate supply side (production) the progress of technology and the innovation of products and production processes, and increase the income of people turn up the volume and composition of consumption aggregate demand side, the primary force behind accumulation process of industrialization in the world.
National industrial development goals both medium and long term is intended to overcome the problems and weaknesses in both the industrial sector and to address national issues, namely:
1. Improving the employment industry.
2. Improve Indonesia's exports and empower the domestic market.
3. Contribute significantly to the growth of the economy.
4. Support the development of the infrastructure sector.
5. Improving technological capabilities.
6. Increase the deepening of industrial structure and product diversification.
7. Improve the industrial deployment.
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2. Factors - Drivers factor Industrialization
1. The conditions and the initial structure of the domestic economy
A State which at the beginning of economic development or industrialization own industries of primary or upstream such as iron and steel, cement, petrochemical, and industries of the middle (between the upstream and downstream), such as the capital goods industry (machine) and the means of production relatively kuatakan undergoing a process of industrialization which is faster than countries that have only downstream industries or light.
2. The size of the domestic market as determined by a combination of the number of population and per capita rate of PN Rill.
Large domestic market, such as Indonesia, with a population of over 200 million people is one of the factors stimulating the growth-kegaiatan economic activities, including industry, because the market is huge ensure economies of scale and efficiency in the production process (assuming that factor- other determining factors support). If the small domestic market, the export is an alternative to the "it to achieve optimal production.
3. The existence of SDA
There is a tendency that countries rich in natural resources, the level of economic diversification and the growth rate is relatively lower, and that State or terlembat tend not industrialize or process goes relatively slower than poor countries SDA.
4. Policy Government Strategies
The pattern of industrialization in the State to implement the policy of import substitution and foreign trade policy that is protective (such as Indonesia, especially during the New Order government until the crisis occurs) is different in countries that implement export promotion policies in favor of his industry.
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3. Manufacturing Sector Development Indonesia
The development of the industrial sector in Indonesia in recent years is good enough. There are several factors that are used for projecting the growth of industrial sector in Indonesia, including the economic crisis in Europe and the entry of imported products into the domestic market. Meskpun current Indonesian manufacturing industry is experiencing bad luck, but this condition is predicted to boom in 2016. This prediction is based on a survey of several countries in Asia, an area of expansion of the investors from Hong Kong. Indonesia is believed to still be the main destination for investors to develop their business.
Through out the last 10 years, Indonesia's economic growth reached its highest point in 2011, namely by 6.2%. In 2012 the growth of industrial sector in Indonesia is projected to rise about 6.4 percent from the year 2011. At that time, the manufacturing industry is able to grow 6.7%. Economic and industrial growth declined subsequently, each only reached 5% and 5.5% in 2014.
On average, in the 10 years of economic growth in Indonesia was only 5.7% and 5% growth in the industry. Low average industrial growth compared to economic growth has reduced the role of the manufacturing sector to gross domestic product (GDP), which lived 22% in 2014 from 29% in 2009. Exports of manufactured products in the same period was also decreased. The decline in the role of the industrial sector can not be separated from the weakening factors supporting industrial competitiveness. And, most worrisome is the efficiency factor of the labor market, especially with regard to labor regulations. Factors employment at 5 position 43 years ago, has now become 110 or the bottom compared to other Asean countries. For this, the most affected are labor-intensive industries such as textiles and footwear. Indonesia weak competitiveness in the manufacturing industry can not be separated from the low mastery of technology. All of the factors described above to be a burden for the development of Indonesia's manufacturing industry.
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4. Problems Industrialization
Industrialization in developing countries are generally done in an effort to replace imported goods, by trying to make their own commodities beginning always imported. The first strategy is done is the implementation of tariff barriers against imports of certain products. Next followed by building domestic industries to produce goods at the import. In addition, they are also given incentives such as tax breaks, as well as a variety of facilities and other investment stimuli.
For a new small industry grow, especially in developing countries. A new industry built yet have sufficient capacity to compete head-on with an established industry of the countries that are already developed. Industry developed countries has been on the business in a long time and have been able to improve efficiency in production processes. They have enough information and knowledge about the optimization of the production process, the situation and characteristics of the market, as well as labor market conditions so that they are able to sell a valuable product cost in the international market but still able to produce an adequate profit.
The national economy has various problems in relation to the industrial and commercial sector:
1. The national industry has been more emphasis on large-scale industry and high-tech industries. This strategy resulted in the development of industries based on imports. These industries are often hit by the depreciation of the rupiah sharply,
2. The spread unevenly because the industry is still concentrated in Java. Industry is only concentrated in one region is certainly not in line with the geographical condition of Indonesia which calls itself as an archipelago.
3. Weak export activities Indonesia who depend on import content of raw materials is high, also the high level of bank lending rates in Indonesia, apalgi Indonesia has not fully accepted in the international market
4. The composition of Indonesian export commodities in general is not a commodity that is highly competitive, but because it is related to the availability of natural resources - such as fishery products, coffee, rubber, and wood. the availability of cheap labor - such as textiles, footwear and electronic goods
5. The primary commodity exports that are a mainstay of Indonesia generally in the form of raw materials so that the added value obtained is very small. For example, Indonesia exported in the form of sawn timber, which is then imported again in the form of furniture because of limited mastery of design and technology.
6. Still relatively low quality of human resources. It is highly influenced by the formal education system and the implementation of training cebderung pattern still common and less oriented to the development needs of the business. In addition, the low quality of human resources as a result of the pattern of employment in the past are still concerned with the amount of human labor is absorbed. rather than the quality of human labor.
Indonesia industrial system does not have the capability of accountability and independent adjustment. Therefore very weak in anticipation of change and unable to undertake precautionary measures to deal with the change occurs. The changing demands of the market and the competition among industry globally not just include changes in the pattern, nature, quality, and price of the commodity being traded, but also other demands arising from the development of the idealism of the world community to human rights, environmental protection, trade liberalization, etc. Motion Indonesian economy is highly dependent on foreign capital flows into or out of Indonesia and the amount of foreign exchange reserves accumulated through trade and foreign debt.
Policies that have been pursued in a sustainable manner was observed not able to bring Indonesia's economy become more self-sufficient, even becoming dependent on:
· Dependence on export earnings,
· Dependence on foreign loans,
· Reliance on foreign investment,
· Dependence on imported technology from industrialized countries.
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5. Industrial Sector Development Strategy
The era of economic globalization accompanied by rapid development of technology, have very tight competition and rapid changes in the business environment. Products of manufacturing in the country is now so out of the factory directly compete with foreign products, businesses also have to accept the fact that the rapid development of technology has resulted in rapid obsolescence of production facilities, the short shelf-life products, as well as with shrinking profit margins. In carrying out the process of industrial development, the situation is a reality that must be faced and should be the determining consideration in any policy to be issued, as well as a new paradigm that must be faced by any country in implementing the industrialization process of the country.
On the basis of these ideas in Indonesia's industrial development policy should be able to answer the challenges of globalization of the world economy and able to anticipate the development of rapid environmental change. International competition is a new perspective for all countries, so that the focus of industrial development strategy for the future is to develop the competitiveness of the industrial sector which is sustainable in the domestic market.
To answer and anticipate problems, issues, and challenges, the Ministry of Industry has prepared a National Industrial Development Policy has been agreed by the related parties, where the approach to industrial development is done through the cluster concept in the context of building a sustainable industrial competitiveness. In accordance with the criteria set forth competitiveness for the medium term (2005-2009) has been a core industry cluster development including the development of related industries and supporting industries.
The development strategy of the industrial sector, is divided into two, namely: basic strategy and operational strategy.
a. Strategic Rationale
1. Strengthening linkages At all levels of the value chain (value chain) of the industry including the activities of supporting industries (supporting industries), industries related (related industries), industrial infrastructure providers, and other supporting services industry. These linkages are developed in an effort to establish industry networks (networking) and improve competitiveness that encourages innovation;
2. Increase the value Throughout the value chain by building core competencies;
3. Increasing the productivity, efficiency and types of resources used in the industry, and focuses on the use of renewable resources (green product);
4. Development of Small and Medium Industries through (a) backup scheme of operations and technical guidance and management as well as the provision of special facilities in order to grow expansively and reliably competitive field. (B) encouraging SMEs to large industrial synergies through a partnership (alliance), and (c) building a business environment that support SMEs.
b. Operational strategy
1. Business Environment Development comfortable and conducive
a) In cooperation with relevant agencies to develop infrastructure and physical facilities in areas of potential industrial prospects are grown, such as roads, bridges, ports, power grids, fuel, transport, warehousing, telecommunications, clean water.
b) Encourage the development of human resources industry, particularly in the areas of Production Engineering and Business Management.
c) Encouraging the development of business infrastructure services and facilities businesses supporting the industry, among other things Industrial Zone, Service R & D, Service Quality Testing, Engineering Services / design of the building and construction, Services Technical Inspection, Auditing, Consulting Services Industry, Service Maintenance & Repair, Security Service / Security services / Sewerage, calibration services, and so forth.
d) Develop effective incentive system policy, educative, selective, and attractive.
e) Improving the legal instrument for setting conducive industrial life, which meet the following criteria:
1) More guaranteeing business / legal certainty, including consistent law enforcement
2) The rules around trying to clear and not difficult
3) Reduce the smallest possible government intervention in the market
4) Respect freedom of venture industry
5) Clarity of rights and obligations of the industry
6) Ensuring and no disruption of public interest, including the interruption of safety, health, cultural values and environmental sustainability.
f) Sync policies related sectors, such as policies on investment and trade.
g) Apparatus Pembina clean, professional, and pro-business in developing and providing services facilitative to businesses, through administrative provisions that simple / easy, can prevent fraud and manipulation that cost the state and society, the impact load that does not burden the industry ( administrative compliance cost is minimal).
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