T

he government aims to build dozens of small and medium industries (IKM) centers integrating technology and innovation outside Java through 2019 to help boost the competitiveness of local industries.

As many as 22 IKM centers are planned nationwide; three in Papua, two in Maluku, four in Nusa Tenggara, two in Sulawesi, five in Kalimantan and six in Sumatra, according to a plan announced by the Industry Ministry. The centers will focus on products that use similar raw materials and production processes.

The Industry Ministry'€™s director general for industrial estate development, Imam Haryono, said over the weekend the development of these centers would be prioritized in regions known for their respective core industrial competence.

The pilot project is slated to kick off next year in Konawe, Southeast Sulawesi, which enjoys ample land, human resources, infrastructure and industrial firms.

Konawe is one of the industrial estates that will host the iron and steel industry.

The proposal to develop the IKM centers supports other plans to spur industrial growth in Southeast Asia'€™s biggest economy, most notably in areas outside Java, where investment has traditionally been hampered by a lack infrastructure. These plans include the construction of 14 industrial estates and seven special economic zones (KEK).

Boosting domestic industry is crucial as the country is anticipating stiffer competition ahead of the full implementation of the ASEAN Economic Community (AEC) early next year.

Small- and medium-sized industries are the backbone of Indonesia'€™s economy, which is largely driven by domestic consumption. The Industry Ministry hopes to add at least 4,500 mid-sized industrial firms and 20,000 small-sized firms within the next five years. The focus will be on encouraging new business entities that process agriculture produce and minerals.

Indonesian Chamber of Commerce and Industry (Kadin) deputy chairman for small and medium enterprises (UKM) Erwin Aksa voiced support for the plan, but cautioned that the development of the IKM centers must be tailored to the specific competencies of each region.

'€œTo ensure the centers work well, they should provide expert staff that can provide much-needed information by firms,'€ he said, citing information on financing and technology as basic needs.

In addition, the centers should also offer trainings to enhance the capacity of small- and medium-sized industrial firms, which they still lack, Erwin added.