This report focuses on the environmental technologies market in Indonesia, particularly in the sub-sectors of air pollution control, potable water treatment, solid-hazardous waste, and wastewater management. These items are part of chapters 84 and 90 of the Harmonized Tariff Schedule (HTS). Pumps, valves and compressors are excluded from this analysis.
The total market demand in 2008 for Indonesian environmental technologies equipment was $180 million. If the domestic and export markets remain stable, it is predicted that the growth of total domestic demand will increase by 5 to 8 percent annually over the next five years.
Despite the current unfavorable economic situation, a number of companies, especially essential and exportoriented ones, have been able to withstand the negative impact of the crisis and are still financially capable of purchasing environmental equipment. These include producers of palm oil, rubber, textiles, plywood, pulp and paper, fertilizer, MSG, tapioca and the sugar sectors, In addition, there are opportunities for U.S. firms to sell equipment, services and technologies through international finance institutions’ environmental projects involving the oil, gas, mining and chemical sectors.
Best prospects include dust collection and air purification equipment, air filtering equipment, air filtering or purification machinery and their parts, monitors and meters of different kinds, water treatment plants and their parts, and oil separation technology. Due to the low level of local providers at the present time, licensing agreements for local manufacturing of equipment have attracted considerable interest.
Domestic production of pollution control equipment represents between 3 and 5 percent of the Indonesian environmental equipment market. The economic slowdown of the Indonesian economy has somewhat diminished the role of domestic manufacturing for the local market.
Local production of environmental equipment includes water meters, pumps, pipelines, and filter tanks (not considered in this study). Domestically-produced equipment covers only low technology items which for quality reasons, has so far only been able to capture a small market share. This explains why the growth in this market is likely to be outpaced by growth in imports of equipment, implying that local needs will increasingly be met with imported equipment.
Roughly 70 percent of the overall pollution control equipment import market is composed of water treatment or wastewater treatment equipment. Numerous firms from Asia, Europe and the U.S. have entered the market seeking business development opportunities. Competitors include Metito Overseas Ltd (UK), Biodetox (Germany), Noggerath (Germany) and Wallace & Tiernan Pacific Pty (Australia). German products have also gained a reputation for their durability and excellent quality, but are very expensive.
The key agency at the national level is the State Ministry of Environment (KLH). At the city or provincial level, after recent moves to increase regional autonomy, the key agency is The City Bureau of Environmental Management (BPLHD) which is under local governor’s office responsibility. Environmental law enforcement in Indonesia is still weak. A major shortcoming is the lack of legal authority within KLH, the underdeveloped national legal system and political will.
By Aulia Rochaini