RI-China trade growing slowly

The Jakarta Post ,  Jakarta   |  Thu, 07/06/2006 5:02 PM  |  Business

The Jakarta Post, Jakarta

Indonesia's bilateral trade growth with China is among the slowest in the region, with growth for the last sixth months at only 2.5 percent, far lower than the year's target of 10 percent, a Chinese official says.

Speaking on the sidelines of a seminar on alternative economic systems, Chinese Embassy minister-counselor for economic and commercial affairs Tan Weiwen said the country's annual trade growth with China was among of the slowest in Southeast Asia.

""Indonesia's trade with China is very low compared to the Philippines, which has 20 percent growth,"" Weiwen said.

He said among the 10 ASEAN countries trading with China, Indonesia was now in fifth position in terms of trade volumes, after the Philippines, Thailand, Malaysia and Singapore.

""In 1996, Indonesia's trade volume with China was the second-highest after Singapore,"" he said.

Weiwen said other countries were trading more with China because their economies had recovered faster than Indonesia's after the 1997 financial crisis. Weiwen said trade relations between other ASEAN countries and China were also better.

He blamed the sluggish trade growth between Indonesia and China on a lack of reinvestment here to increase production capacity.

""China's demand (for goods from Indonesia) is high; however, Indonesia's supply is low,"" he said.

This year no new investment occurred in the pulp and paper industry, although its products are one of the country's top exports to China, he said.

China's annual demand for pulp was more than 20 million tons, while Indonesia's production was only 5.4 million tons last year. Meanwhile, China's annual demand for paper was over 40 million tons, while Indonesia's production was only 8.2 million tons in 2005.

The effect of the fuel price hikes last year, which increased business costs and caused inflation and interest rates to spike, decreasing consumer purchasing power, had also affected China's trade with Indonesia.

Weiwen said in 2005, the two-way trade between Indonesia and China was US$16.79 billion, 20 percent higher than in 2004.

He said that Indonesia was targeting $30 billion in trade with China for 2010.

With the deadline was only four years away, Indonesia would have to work hard to reach that target, Weiwen said. (08)

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