The Ministry of Industry (Kemenperin) has initiated a 35 percent import substitution policy by 2022. This policy aims to improve the national trade balance, especially for raw materials and auxiliary materials which are the backbone of the national processing industry. "Import substitution also encourages increased domestic industrial utilities, increased investment, and accelerated downstream programs to strengthen the national manufacturing sector," said Director General of Chemical, Pharmaceutical and Textile Industries (IKFT), Muhammad Khayam, in Jakarta, Sunday (12/12/2010). 2021). According to the Director General of IKFT, the import substitution policy provides an opportunity for domestic industries to grow and improve competitiveness. The approach taken in the import substitution policy from the supply side includes industrial expansion to increase the production of raw materials and auxiliary materials for existing industries, increase new investment, and increase industrial utilization. "The IKFT sector is expected to be able to make a major contribution to the import substitution policy," he said.

One of these potentials is shown by the performance of the pharmaceutical industry, chemical drugs and traditional medicine as well as the chemical and chemical goods industry which grew positively by 9.71% (yoy) in the third quarter of 2021. Khayam said that currently there are 223 pharmaceutical formulation companies/ finished products, consisting of four state-owned companies, namely PT Bio Farma Tbk (as holding), PT Kimia Farma Tbk, PT Indofarma Tbk, and PT Phapros Tbk. Next, there are 195 national private industries, as well as 24 multinational companies (MNCs). "The Indonesian pharmaceutical market in 2019 was around Rp. 88.3 trillion, growing 2.93% compared to the previous year. In addition, 76-80% of the need for national drug products has been able to be met by the domestic pharmaceutical industry," he said. Khayam explained that the raw materials for making drugs consist of two parts, namely active raw materials or active pharmaceutical ingredients (API) and additional raw materials or excipients. "Currently, we are working hard to spur investment and domestic production in order to suppress imports of medicinal raw materials," he said.

This creates great opportunities for the deepening of the structure and development of the raw material industry and additives for the pharmaceutical industry. "In addition to strengthening the resilience of the national pharmaceutical industry, it also contributes to import substitution policies," he added. Therefore, the Ministry of Industry is committed to encouraging the independence of the pharmaceutical industry as an important sector in supporting national health development through the development of the drug raw material industry (BBO). In addition, it is supported through the implementation of the program for Increasing the Use of Domestic Products (P3DN) in the context of import substitution. "It is believed that import substitution efforts can help reduce Indonesia's trade balance deficit, especially in the pharmaceutical sector," said Khayam. However, efforts to realize the independence of the national pharmaceutical industry through the independence of the BBO industry, require a common perspective from various relevant stakeholders, between the national security perspective and the economic perspective as well as policy consistency. “A comprehensive policy to achieve fairness of level playing field is needed in facing competitors from the main BBO producers in the world. It is hoped that government policies can increase economic feasibility in the short term, and then increase competitiveness in the medium to long term," he said.

Sources: https://www.beritasatu.com/ekonomi/866157/kemenperin-inisiasi-kebijakan-substitusi-impor