Trade expo 2010: Indonesian exports continue to grow

Indonesia is among the few countries that have passed through the 2008 financial crisis relatively unscathed.

The robust performance of Indonesian exports throughout this year is another strong indication that Indonesia has weathered the crisis well, creating optimism that the country’s economy is facing brighter days ahead.

Indeed, Indonesia is not dependent on exports as much as its neighboring countries. As a consequence, when the financial crisis hurt consumption in most of the countries in the developed world, the export-dependent neighboring countries suffered heavy blows, and saw their economies shrinking. The impact on Indonesia is, however, not significant as domestic consumption remains a major driver of economic growth in the country. Indonesia could still record a 4.5 percent economic growth in 2009, as against 6.1 percent in the previous year.

Exports contribution to GDP in Indonesia reaches about 40 percent, lower than in its regional peers such as Malaysia and Thailand. This means there is an ample room for Indonesia to boost the contribution of exports to economic growth.

While Indonesia, like other countries in the region, saw its exports slump last year as a consequence of the global financial crisis, exports have been growing this year amid signs of global economic recovery.

Within the January–August period of the year, the country’s total export reached US$98.7 billion, with the non-oil and gas sector contributing a total of $81.7 billion. Total exports represented an increase of 40.42 percent from that of the same period in 2009, while non-oil and gas exports rose by 36.25 percent.

Indonesia recorded a surplus of $10.9 billion in the first eight months of the year, an increase of 3.8 percent from the same period in 2009. The 2010 trade balance has an $11.4 billion surplus for non-oil and gas products and a $452.5 million deficit for oil and gas products.

In August 2010, non-oil and gas exports reach $11.8 billion, which is a record high for monthly non-oil and gas exports, up by 32.4 percent from the same period of last year.

Trade Minister Maria Elka Pangestu said in a recent media conference on Trade Expo Indonesia (TEI) 2010 that for years the government has made efforts to boost non-oil and gas exports in order to reduce dependency on exports of oil and gas products. And the efforts have apparently paid off as non-oil and gas exports now account for 82.8 percent of total national exports.

Mari stressed that exports have played and will continue playing an important role in driving economic growth and the annual TEI exhibition is among the tools that are expected to help boost the country’s exports.

“We hope that TEI will become part of the success story of Indonesian exports,” she said.

In the last five years, the country’s non-oil and gas exports reached $556.6 billion, an almost tenfold increase from that of the first five-year period between 1985 and 1990.

The Central Statistics Agency (BPS) recently revealed that Indonesia has experienced the highest growth of exports in the last 25 years. Between 2004 and 2008, the country increased its exports by approximately 17.6 percent per year. And after experiencing a slump in 2009 following the economic crisis, the country has almost fully recovered to the pre-crisis level with an export growth rate of approximately 12.3 percent.

BPS also revealed that Japan and the United States had become the main destinations of the country’s non-oil and gas exports. Between January and August 2010, five countries — China, Japan, United States, Malaysia and Singapore — took the largest portion of Indonesian exports. Of the five countries, Japan recorded the fastest growing rate in imports from Indonesia. Japan’s imports from Indonesia rose 13 percent or $3.4 billion in the January to August 2010 period compared to that of 2009.

Economic analysts claim the stronger export performance reflects the stronger economic recovery in developed countries.

But many are still concerned over the fact that the outstanding figures of the country’s exports will not be sustainable as it is mainly caused by higher prices of agricultural commodities due to low supply and bad climate, and the sharp increase in coal exports.

Indonesia mostly exports agricultural commodities such as crude palm oil (CPO), crumb rubber and cocoa that have very low added value locally, and they are vulnerable to price fluctuations on the international markets.