18/02/2016 (Jakarta Post) - The government is focusing on developing industry for more sustainable growth amid weakening prices of the country’s main commodities.

Coordinating Economic Minister Darmin Nasution said on Tuesday that the national industrial policy had been well set amid a slump in commodity prices, with industrial development aimed at boosting exports and creating jobs.

“In this kind of situation [commodity prices falling], we should not be dragged down or find no way out. The industrial sector has to be revived,” he said at the opening of the annual Industry Ministry’s working meeting.

He added that it was the time for the country to reduce its reliance on natural commodities and shift to the manufacturing industry as it could provide more jobs, be highly productive and supply goods for other sectors. Meanwhile, Industry Minister Saleh Husin said the country’s grand design for industrial development up until 2019 was directed at creating added value for its natural resources.

In its five-year road map, the Industry Ministry emphasizes downstreaming to provide added value to products to offset declining commodity prices.

The prices of 20 main commodities like coal, palm oil and copper dropped 0.53 percent to 42 percent in January year-on-year (yoy), according to Central Statistics Agency (BPS) data.

In the industrial development road map, the government is set to prioritize food, pharmaceuticals, textiles, transportation, technology, power plants, components, agro downstream, metals and chemical companies.

In the road map, the growth target has been set at 8.4 percent for the non-oil and gas industry in 2019, with the manufacturing sector expected to account for 19.4 percent of gross domestic product (GDP).

Samuel Asset Management economist Lana Soelistianingsih said the government needed to speed up the downstreaming process and develop a raw materials industry to boost the country’s competitiveness.

Lana said Indonesia’s trade deficit with Thailand in January this year as announced by the BPS was proof that the country still lagged behind its Southeast Asian peer.

“In the mid-term, we have to materialize our manufacturing-based commodities,” she said.

Indonesia had a US$328.6 million trade deficit with Thailand.

The Industry Ministry’s director general for agro-industry, Panggah Susanto, said the government was boosting the crude palm oil (CPO) processing industry.

The government plans to establish palm oil green economic zones to boost the CPO upstream industry, with the Sei Mangkei, Pelintung-Dumai and Bontang industrial zones becoming the main focuses for CPO downstreaming. Indonesia is currently the world’s largest CPO producer, with annual CPO production hitting 31.5 million tons. It is expected that the country’s CPO production will hit 40 million tons by 2020 and 60 million tons by 2030.

Panggah said, meanwhile, that among the challenges in developing the palm oil industry were land acquisition and lack of training for small-time farmers.

Total palm oil plantation areas currently account for 5.8 percent of 189 million hectares of total plantation areas in the country, Industry Ministry data shows.