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harmaceutical manufacturers have asked the government to provide more incentives to boost the upstream pharmaceutical industry in order to lessen their reliance on imports.

Indonesian Pharmaceutical Association (GP Farmasi) executive director Darodjatun Sanusi said Indonesia had abundant ingredients to produce the raw materials needed for drug production, but lacked the technology to process them.

'€œBesides the lack of technology, the market size for the upstream industry is small. It has high investment risk,'€ he said during a pharmaceutical exhibition in Jakarta on Tuesday.

Speaking at the same event, Kimia Farma'€™s president director Rusdi Rosman said it was important that the government help local pharmaceutical producers reduce their imports.

Both Darodjatun and Rusdi agreed that the government needed to offer more incentives to the upstream industry.

Rusdi said that a number of companies had entered the upstream industry, but they eventually stopped because they were unable to compete with imported products.

Thus, it is necessary that the government provide fiscal incentives to revive operations.

The government, Rusdi said, could echo incentives similar provided by other countries. '€œTax, for example, can be reduced, or even be exempt for several years, so raw materials produced locally can compete with imports,'€ he said.

If locally produced raw materials are more expensive than imported goods, pharmaceutical producers will surely turn to imports, he added.

Pharma Materials Management Club chairman Kendrariadi Suhanda recently said that almost 95 percent of raw drug materials in Indonesia were imported, mostly from China and India.

Health Ministry pharmaceutical and medical devices director general Maura Linda Sitanggang said that the government was targeting to reduce the amount of imported raw drug materials to 90 percent in the next five years.

But, Rusdi said that the target could only be achieved if the government provided investor-attractive incentives.

Commenting on the new negative investment list (DNI), Darodjatun said that he did not mind that the foreign ownership limit on pharmaceutical manufactures in Indonesia had been raised to 85 percent from 75 percent.

'€œAs long as they can benefit the industry in Indonesia, such as by bringing new technology to boost raw material production,'€ he added.

Regarding the national health insurance (JKN) program, he said it would have a significant impact on the local pharmaceutical industry.

'€œWith the program, healthcare spending in Indonesia is estimated to increase by about 200 percent by 2020. It means that the current market of US$ 5.3 billion will increase to at least $15 billion,'€ he said. (ask)