The global financial turmoil may have a devastating impact on the manufacturing sector next year as demand is likely to slump, while imports could threaten to flood the domestic market as a result of overproduction worldwide.

"The impact to Indonesia is very serious. It will not ease within the next three years. The government must not consider the current situation 'business as usual'," said Sofjan Wanandi, chairman of the Indonesian Employers Association (Apindo).

Besides an export slowdown, which may cut production capacity and labor use, Sofjan highlighted the need for the government to guard against smuggling and imports of unnecessary goods that could be produced locally.

"I'm afraid foreigners will dump their overproduction of goods in the Indonesian market. This is bad for us because we expect sluggish exports to be compensated for with domestic demand," he said.

Trade Minister Mari Elka Pangestu said exports would grow by 10.9 percent next year, a downward revision from an earlier figure of 11.5 percent, following fears of a global recession.

Exports stood at US$95.45 billion between January and August this year, a year-on-year increase of 29.87 percent. Last year, exports reached $113.99 billion.

M.S. Hidayat, chairman of the Indonesian Chamber of Commerce and Industry (Kadin), called on the government to help exporters diversify their markets to help offset the decline in demand from the United States and Europe.

He predicted the country would start feeling the impact of the global downturn "sometime in the first or second quarter of next year".

The government, meanwhile, is readying measures to protect the country's trade balance by reducing imports.

Diah Maulida, the Trade Ministry's director general for foreign trade, said the government would keep pushing exports while simultaneously protecting the domestic market and limiting imports through nontariff barriers, among other measures.

"We'll identify what kinds of goods we really need to import. We may only allow imports of raw materials for industrial processes," Diah said.

"We will also enforce the implementation of the Indonesian National Standards (as an import barrier) and boost the identification of smuggled products."

She stressed these measures would not violate international trade regulations.

Budi Darmadi, the Industry Ministry's director general for automotive, telecommunications and informatics industries, said the government would enforce the implementation of Indonesian standards for electronic products, including energy-saving lamps.

For the automotive sector, Budi added, the government would control imports of completely built up (CBU) cars.

Syarif Hidayat, the Industry Ministry's transportation industry director, said imports of CBU cars reached 51,000 units last year, and 30,000 units in the first half of this year.

The imports will likely reach between 60,000 and 70,000 by the end of this year, he said.

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