Quarterly Report - Kadin Indonesia

Although the global value chains in T&C are primarily buyer-driven, foreign directinvestment (FDI) plays an important role at the production stage. In many developingcountries, foreign affiliates dominate such exports, and some producers have emerged asmajor transnational players, controlling production plants in several countries. Based onUNCTAD data, during the period 2002–2004, a total of 275 FDI projects related to themanufacturing of T&C were recorded.10 As Table 4 shows, 38% of these projects werein developing Asia. The leading destinations in this region were China (with 48 projects),India (9), Vietnam (8) and Thailand (8). The CEE countries accounted for another 29%,with Bulgaria (18), Hungary (13) and Poland (7) as the main targets (Table 5). LatinAmerica and the Caribbean and Africa attracted 13% and 6% of all projects, respectively.Table 3: Year on year manufacturing growth by group of industryin Indonesia (%)1993 2000Sector 1997 2003(%) (%)Manufacturing Industries (Mfg) 10.0 3.8Petroleum & Gas 2.1 -3.8Petroleum Refinery 1.7 -5.1Natural Gas 2.7 -1.9Mfg. excl. Petroleum & Gas 11.1 4.7Food, Beverage, Tobacco 16.2 2.4Textile, Leather, Footware 5.4 5.1Wood & Wood Products 2.2 1.0Paper Products 10.6 2.6Chemicals & Rubber 8.8 11.7Cement, Non-Metalic 1.4 9.6Iron & Basic Steel 7.9 -0.6Transport Eq. Mach. & App. 5.2 9.8Misc. Mfg Products 9.5 18.6GDP 7.1 3.8Source: from Table 1 in Aswicahyono and Feridhanusetyawan (2004)(data BPS).With respect to Indonesia, Tables 6 and 7 show, respectively, the allocation ofdomestic and foreign investments by groups of industry in Indonesia, and Figure 2 showsthat T&C industry in Indonesia faces heavy competition besides from food industries (seeTables 6 and 7) but also from metal and electronics industries as destination of FDI.4KadinIndonesia – www.kadin-Quarterly Report - January 2006indonesia.or.id