Indonesia looks outside Asia for future markets

INDONESIA is looking outside ASEAN for future markets, but will push to restrict exports of some agricultural products when it hosts the WTO meeting in Bali in December . . .

JAKARTA — Indonesia slipped into its first trade deficit in more than two decades in 2012, reflecting the slowing of global trade and a drop in commodity prices.

So far this year, the slide has continued, and 2013 is expected to end with export growth 3-4 per cent lower than last year, and a total value for exports of US$189-US$190 billion — compared to US$230 billion in 2011 and US$191 billion in 2012.

Gusmardi Bustami, Director-General of Indonesia’s National Export Development Agency, told ATI that 2011 was the best year for exports, registering 23 per cent growth over 2010.
Bustami attributes the slowdown since then to economic problems in Europe and a slow recovery in the United States. He says non-oil and gas exports in the first five months of 2013 totalled US$62.8 billion, compared with US$64.2 billion in the same period last year — down 2.3 per cent.

“We are importing a lot of oil and machinery because of the rise in foreign direct investment,” he says, explaining one reason for the trade deficit. “We are trying to maintain our total exports at last year’s level. If we can, that will be quite a success.”

Indonesia has started to make headway into non-traditional markets — Africa, the Middle East, Latin and South America, and Central ASEAN — with promising early success.

Indonesian exports to Africa five years ago were worth about US$2.6 billion, but these almost doubled to US$4.8 billion in 2012. “With a billion people and combined GDP of US$1.6 trillion to US$1.7 trillion, Africa presents a promising market,” he says.

“We are also quite happy with our progress in Latin America. Columbia, Ecuador, Peru, Brazil and Chile, which collectively imported US$4.6 billion worth of food from Indonesia last year — again double the value of five years ago.”

Japan remains Indonesia’s largest market (30 per cent), followed by China (21 per cent) and Singapore (17.1 per cent). The US, Korea and Australia are among its top 10.

Bustami expects intra-ASEAN trade to grow substantially, taking 22-23 per cent of Indonesia’s exports, following the introduction of the ASEAN Economic Community in 2015.

Indonesia will be the biggest consumer market for ASEAN member States. It has seen annual growth of 15 per cent in exports, buoyed by demand for crude palm oil, for example, from China and India over the past decade.

Bustami says the country’s strategy is to have more value-added exports. It will reduce exports of crude palm oil and increase exports of processed palm oil products. Indonesia is the world’s second-largest producer of rubber, he adds, and the plan is to process some of that raw material in Indonesia to create employment and to generate investment.