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Metal Casting Technologies : September 2006
www.metals.rala.com.au 36 INDONESIA Indonesian Market -- Too Hard to Read By Ken Foulke Indonesian President Susilo Bamabang Yudhoyono has forecast that the country's economy will grow 6.3% in 2007 in consideration of its economic increase in the second half of this year. Indonesia is characterized among the lower middle-income countries of the world. Per capita income was US$810. Unemployment rate was estimated to be 10.3% in 2005. Some statistics: Population 223 million Population below Poverty Line 27.1% GDP Growth 5.6% Inflation (2005) 17.1% Unemployment 10.3% Labour Force 105.7 Million In late 2005 Indonesia faced a 'mini-crisis' due to rising oil prices and imports. The currency reached Rp 12,000/US$1 before stabilizing. The government was forced to cut its massive fuel subsidies, which were to cost $14 billion for 2005, in October. This led to a more than doubling in the price of consumer fuels, resulting in double-digit inflation. The situation has stabilized, but the economy continues to struggle with inflation at 17% in January 2006. As of early 2006, Indonesia's economic outlook is more positive. Economic growth accelerated to 5.1% in 2004 and reached 5.6% in 2005. Real per capita income has reached pre-crisis levels. Growth is driven primarily by domestic consumption, which accounts for roughly three-fourths of Indonesia's gross domestic product. Problems that continue to put a drag on growth include low foreign investment levels, bureaucratic red tape, and widespread corruption. Despite being the only East Asian member of OPEC, Indonesia's fuel production has declined over the years, owing to aging oil fields and lack of investment in new equipment. As a result, despite being an exporter of crude oil, Indonesia is now a net importer of oil and had previously subsidized fuel prices to keep prices low, costing US$7 billion in 2004. Metal casting information for Indonesia is not readily available, and the rather wild economic roller coaster the country has been in makes for a pretty uncertain casting market. There continues to be a distinct lack of any real cohesion in the industry. MALAYSIA Steady Growth for Malaysia By Ken Foulke Malaysia continues to be a rapidly developing and diverse country with regard to the metal casting industry. Although 2006 has seen a slight decline in the dynamic of the industry, the outlook continues to be bright in general for Malaysia. As an original member of ASEAN, more of Malaysia's exports are sent to other ASEAN members than any other trading partner, (USA, Europe, Japan and China represent the Malaysia's other major trading partners). Some statistics: Population 26.6 million GDP Growth 5.3% Per Capita Income US$5,100 per annum Unemployment 3.8% Labour Force 10.6 Million (source; Malaysia Department of Statistics) In the metal casting industry, The Malaysian foundry industry developed mainly on servicing the traditional tin, rubber and palm oil industries. According to statistics, there are about 70 sand casting foundries in operation, although probably more than 50% are of the "backyard variety". There are about 60 die casters in Malaysia, servicing mainly the electrical and automotive industries. While the overall condition of the casting appears to be robust in Malaysia, there is continuing pressure from external casting supply sources in the area, most notably China. China continues to exert influence in the area and to provide continually improving quality castings at competitive pricing. Moreover, the recent situation with raw materials supply in the region saw huge impact from China. In addition to the external influences in the region, Malaysia's recent political change that saw the retirement of long-time Prime Minister, Dr. Mohathir, does not appear to have been completely tranquil. What appears to an outsider to be a lack of stability within the manufacturing sector seems to be taking a toll in certain areas. The general casting industry in Malaysia continues gain sophistication, although such improvement cannot be noted across the board. Castings for the mining industry continue to develop with Malaysia's manufacturers gaining world-wide respect for the products and supply performance. AsianFoundryOverview