RI suffers trade deficit on lower commodity prices

Mustaqim Adamrah , The Jakarta Post , Jakarta | Tue, 09/02/2008 10:21 AM | Business

Indonesia's trade balance stood in the red last month -- the first time the country has suffered a trade deficit in more than a year -- due to a slowdown in exports, according to the Central Statistics Agency (BPS).

The country posted a US$270 million trade deficit in July amid a check in commodity prices, especially crude palm oil (CPO) -- of which Indonesia is the world's largest producer -- after a period of rapid growth.

According to the BPS, July saw $12.55 billion in exports, 25.5 percent higher than a year earlier, and $12.82 billion in imports. Exports in June jumped 34.9 percent to $12.9 billion.

BPS chairman Rusman Heriawan said the country experienced a trade balance deficit for the first time this year on lower international prices of CPO, animal fat and vegetable oil.

"Exports of animal fats, vegetable oil and CPO categories declined to $1.48 billion in July from $2.06 billion in June," he said in a press conference Monday.

"The July decline in CPO exports was also because the government imposed a 20-percent export duty on CPO, which then dampened demand from overseas," he said, adding that the deficit was likely to extend into next month.

Indonesia currently sells CPO for about US$850 per ton, far below the $1,200 per ton mark recorded in March and April.

Rising demand for coal, palm oil and rubber propelled Indonesia's economy to grow at a rate of 6.4 percent in the second quarter, the fastest rate in nine months.

According to the BPS, the deficit was also due to high non-oil and gas imports, which reached $9.24 billion in July, a 9.54 percent increase from $8.44 billion in June.

July saw high imports of aviation components and machineries, electric machineries and equipment, and iron and steel.

"The largest imports by value were (goods related to the aviation industry)," said Rusman.

Imports of aviation components and machineries increased by $210.7 million to $1.66 billion in July from $1.45 billion in June -- the highest growth by value of all imported commodities, according to the BPS.

Imports of cereal and cotton products decreased in the period.

Oil and gas sector imports reached $3.57 billion in July, a slight decline from $3.59 billion in the previous month.

Despite the monthly deficit, the country's enjoyed an overall trade balance surplus in the first seven months of the year of $5.15 billion.

Total exports in the period stood at $83.03 billion and total imports were $77.88 billion.

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