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Each day TFO Canada publishes a sample of trade news on the Canadian import market along with any new, updated or changed regulations and legislations regarding international trade; countries in which TFO Canada offers services and on the export sectors which it promotes.

 

Indonesia: Exporters likely to endure another tough year

Friday, January 09, 2015 > 11:06:43
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(The Jakarta Post)

Indonesian exporters may well struggle again this year as the global economic slowdown is likely continue to have an impact on their business.

Institute for the Development of Economics and Finance (Indef) economist Ahmad Erani Yustika said on Tuesday that it would be hard for Indonesia to boost exports as the downward trend in commodity prices would probably continue throughout this year.

Primary commodities currently make up more than 60 percent of overall exports in Southeast Asia’s biggest economy.

“The chances of boosting exports will be slim as the global economic situation is still bleak. There are not many measures that can help,” Erani said. Among the measures that he recommended was the acceleration of the processing of key commodities, including agricultural and mining products, as well as maximizing the penetration of non-traditional export markets such as Africa, the Middle East and South America.

At a press conference on Tuesday, the Trade Ministry’s director general Partogi Pangaribuan, however, said the government was optimistic that recovery would take place particularly in the United States and Europe, opening the path to increase exports as early as the first quarter of this year. Lower oil prices would also encourage overseas industries to revive their manufacturing activities, spurring demand for commodities.

The Trade Ministry had set a US$192.5-billion target for exports in 2014, which would have been a 4.45 percent rise from the $184.3 billion estimated for 2013. However, it is unlikely that the target was achieved as the export performance during the Jan to Nov period was below expectations.

Indonesia’s total exports amounted to $161.67 billion during the Jan-Nov period, down 2.36 percent year-on-year. Of the total, non oil and gas exports amounted to $133.69 billion, a 1.95 percent decline from $136.35 billion in the same period in the previous year.

Former deputy trade minister Bayu Krisnamurthi said the country’s export sector would be able to grow by around 15 percent to 20 percent this year as demand from Indonesia’s major trading partners such as the US was expected to rise.

With the sharp depreciation of the Indonesian currency to around Rp 12,500 per US dollar, Indonesian commodities should be competitive in the global market, he said.

Bayu, who also chairs the Association of Agriculture Experts (Perhepi), urged the government to keep tabs on the US, but also Japan and South Korea, with both countries expected to post stable growth this year.

Southeast Asia, which represents a quarter of the country’s export market, was also expecting slightly higher growth this year, especially ahead of the ASEAN Economic Community (AEC), he added.

China also represents a unique opportunity for the country, with imports continuing to grow in spite of its slowing economy. To this end, Bayu suggested that the government commit more market intelligence to anticipate Chinese demand in the energy sector next year, something Indonesia might be able to fulfill.

Additionally, he urged the state to push investments toward intermediary production to replace raw-material exports and speed up trade-supportive infrastructure such as electricity, seaports and the railway system, so as to support the supply-chain flow.

“The state must also continuously promote the country to raise consumer awareness, [but also] reduce mineral and gas imports and be more serious in resolving trade disputes,” the former government official said.

Bayu said he believed the country’s exports would improve significantly if all these criteria were met.

“I suspect 2015 will go quite well. If the country’s exports growth averaged 11-12 percent in the last 10 years, I think 15 percent growth for the non-mineral and gas sector is realistic — 20 percent if US conditions are exceptionally good for us,” he concluded.


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