Khoirul Amin, Jakarta – The government needs to pay more attention to the service sector, which is constantly growing, as commodity prices slump and the manufacturing industry faces flat growth, experts and industry players have said.
Mari Elka Pangestu, an economist and former trade minister, said Tuesday the service sector could be an alternative engine of growth and could serve as a tool to boost competitive advantage amid unfavorable commodity prices.
"Besides adding value to the manufacturing industry, it is also very much feasible to jack up trade with services," she said.
The government is now pushing hard to provide added value in the manufacturing industry to stimulate growth and offset low commodity and oil prices. The non-oil and gas manufacturing industry grew by only 5.04 percent last year, far lower than the initial target of around 6 percent.
Sigma Sembada Group chairman Chris Kanter said the service sector was of great importance for supporting national growth. "Infrastructure development has always been on top of the national agenda, but I think services also need to be made a priority," said Chris, who chairs the board of founders at the Indonesia Services Dialogue (ISD).
The services industry, which covers various sectors from transportation to communications, has made a growing contribution to gross domestic product (GDP), from 45 percent in 2000 to 55 percent in 2012, according to ISD data.
The data has also revealed that the service industry provided jobs to 21.7 million people from 2000 to 2010, far higher than the 2.2 million jobs created by the manufacturing industry during the same period.
Mari, who is also a former tourism and creative economy minister, said the government needed to be more open to foreign talent developing sectors that were lagging behind. "However, it must be assured that a transfer of knowledge and technology prevails," she said.
A member of the board of directors at cigarette giant PT HM Sampoerna, Yos Adiguna Ginting, said his company used various services throughout the manufacturing process. Its products rely on services such as logistics and packaging before arriving at end-consumers, he said, signaling that the potential for the service industry was huge.
Compared to regional peers like the Philippines and India, which are famous for their outsourced call center services, Indonesia is still lagging behind in providing services in the global value chain.
"Call centers probably aren't our strength, but graphic design, animation or anything to do with drawing or the arts; we win," said Mari when asked which service sectors the country could capitalize on.
In garment manufacturing, for example, the country should also aim to increase fashion design and eventually have its own brands, she added.
Arianto Patunru, a professor at the Australian National University (ANU), said developing global-standard education and hospital services would also be a great tool for preventing money from flowing overseas.
The Health Ministry has previously revealed that as many as 600,000 Indonesians traveled overseas for medical treatment in 2012, a surge from 350,000 people in 2010. It is also estimated that total medical spending by Indonesians overseas hit US$1.4 billion in 2012, up from only $500 million in 2010.
In an attempt to open up a discussion on services with the public, the ISD is set to hold the Sadli Lecture and the International Services Summit 2016 on April 12 in partnership with ANU and University of Indonesia.
Set to present at the summit are a number of high-ranking officials, such as Trade Minister Thomas Lembong, Coordinating Economic Minister Darmin Nasution and Transportation Minister Ignasius Jonan.
Source: http://www.thejakartapost.com/news/2016/03/10/experts-call-government-develop-service-industry.html