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Interview

with Supardji Soekowati, Chairman, APPI- Indonesian Electrical Manufacturers Association

03.05.2012 / Energyboardroom

What is the vision behind creating APPI in 2009, and what objectives did the association set for itself?

Objective is to coordinate the members and encourage cooperation, particularly in technical, quality and management issues. APPI also serves as a two-way communication platform, connecting both our members and the regulatory government agencies. For instance, whenever our participants have certain issues they would like to address with the government, APPI serves a unified voice to communicate such issues. Likewise, when the government passes new standards or regulations affecting our members these are communicated directly to APPI, which then disseminates the new policies to all of the member companies.

Does this mean that APPI can influence or help direct government regulations in a favourable manner for its members?

Yes, of course. In general, I think the government is prepared to take the necessary measures to ensure the stable development of Indonesian industry in general and this includes the electrical manufacturers sector, and are therefore being very receptive to our recommendations. It is often the case that government authorities approach APPI for input and suggestions with respect to existing and potential regulations that have a direct or indirect impact on our current state of affairs.

Some examples of the different agencies that we are actively working with towards developing our industry include the Ministry of Industry and within it, the Centre for Industry Education and Training, as well as the National Standardization Agency of Indonesia.

What are the priority issues on the association’s agenda today?

Broadly speaking, given the rapidly expanding power industry, we are focusing on persuading the local government agencies and businesses to take advantage of local electrical products manufacturers before turning their attention to the international market and importing these products from foreign producers. For example, local switch-gear panel producers can supply 100% of PLN’s demand for the equipment. However, in practice, this is not the case as some public and private businesses do import their products from abroad. Therefore, the leading priorities of APPI at the moment include optimizing tax and regulatory issues for the development of the local manufacturer industry.

Another concern that we are currently addressing, relates to the recently implemented mandatory standards that relate to coil materials used in transformer production. Unfortunately, our manufacturers have had to resort to importing this material from abroad since the local supply of this material, at the required standard levels, is too low. However, in order to import this material, certain permissions must be obtained from the government and this hinders the ability of transformer producers to fulfill their demand levels by limiting the supply of this integral raw material. Nonetheless, the government has been making some effort towards attracting investors and increasing the local supply of this coil material in order to meet their demand levels.

How would you rate Indonesian electrical manufacturers compared to internationally recognized manufacturers in terms of efficiency?

Operational and production efficiency is a global issue top on the list of most manufacturers across the world who are striving to maximise this just as we are here in Indonesia. In fact, I believe this is ingrained in the Indonesian culture, to always improve oneself and I believe Indonesian people have the potential to achieve this.

Therefore, it is paramount that the quality of human resources in Indonesia is allowed the opportunity to develop to their fullest potential, especially in the technical and managerial aspects. Also, it is important that necessary incentives are put into place that will direct Indonesian society towards industrializing its people. I think that Indonesians still maintain an agrarian culture and this is not in line with where we would like to see ourselves in the near future.

As a matter of fact, APPI has taken it on to itself to help and promote this initiative by organizing educational programs for workers of our member companies. We have implemented programs that are intended to promote good work ethics and educate and advance the skills and knowledge of our engineers. We are also focusing in other areas including quality management as well as customer service excellence.

How many members are represented by the Indonesian Electrical Manufacturers Association (APPI)? And are a majority of them local or foreign?

All 70 member companies of APPI are locally founded companies. However, of these, about 50% of them are involved, to a certain degree, with international companies through license agreements or joint venture partnerships. Some examples of these include international partners include ABB, Schneider, Osaki, Alfaprima, etc…

What is the composition of APPI’s client base? Do you cater more to industrial, institutional or private customers?

The client segments that our members serve are highly dependent on the product that the manufacturers produce. For example, in the metering segment, we mainly cater to the state utility company, PT PLN. However, in the circuit breaker segment the main clients are composed of PT PLN as well as general consumers, such as construction companies. With regards to the transformers, the main clients include PT PLN, however, sometimes they do also cater to other consumers such as telecommunication providers.

Clearly though, our main client, overall, is PT PLN with some private and government clients in between. Needless to say, this is because our members are all manufacturing companies whose activities are focused around production and wholesale distribution. Rarely do our member companies engage in retail sales or installations.

Given the rapid growth of the Indonesian power industry and its potential, how are APPI members coping with this increase in demand?

Our manufacturers are in fact faced with an excess production capacity for the local market. Interestingly, two years ago, PT PLN has implemented a new standard in which they would only purchase electronic metering devices. However, the local manufacturers were only able to supply this newer technology as of last year since, since at the time they were producing only mechanical meters. For that reason, PT PLN began importing from these products from South Africa, China and Taiwan. But now we have more than 5 manufacturers that provide electronic meters. In fact, not only has their demand now been fully satisfied, but it has now been exceeded and some of our members have begun exporting their excess supply to markets abroad. In the case of PT Metbelosa, we are currently exporting our metering devices to Taiwan, the Middle East, Africa and South America.

How would you like for the rest of the world to see APPI in five years?

Of course we are ambitious and would like to see that we can compete on an international level. We are committed towards a proactive cooperation between our entire member group to work towards increasing our manufacturing capability. Moreover, considering the development and ultimate goals of the Indonesian power market, this provides us with an excellent opportunity and creates exciting business opportunities for Indonesian businesses.

Any final messages for our readers?

I support and appreciate your initiative to come to Indonesia and communicate our story and potential. APPI is building upon its good reputation and continuing its commendable business performance, which can only be further supported by such initiatives.

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