Trade Minister Muhammad Lutfi said on Wednesday that the ministry was optimistic about maintaining the trade surplus after the Central Statistics Agency (BPS) reported a surprise surplus of US$785.3 million in February.

The impact of the mineral ore export ban, which came into effect on Jan. 12, was '€œfar better than expected'€, he said, citing the 4.32 percent year-on-year fall in mineral and gas exports.

The impact of the ban took its toll in January, when the country recorded a $430.6 million trade deficit after three consecutive months of trade surplus.

'€œOf course the ore export ban affected our overall exports,'€ said Lutfi during a press briefing.

'€œBut we performed better than analysts expected. This means that our trade structure has shown improvement.'€

Imports fell 9.98 percent to $13.78 billion in February from a year earlier as purchases of raw materials, intermediary goods and capital goods declined 11.51 percent to $10.32 billion, while imports of oil and gas dropped 5.07 percent to $3.46 billion.

Meanwhile, exports dropped 2.96 percent on a yearly basis to $14.57 billion, particularly on the still weak non-oil and gas exports, which fell 4.32 percent to $11.91 billion.

February'€™s trade surplus, which was higher than the average of $760 million predicted by analysts, helped reduce the overall deficit in the first two months of the year to $354.7 million.

Investment consultant PT Investa Sarana Mandiri analyst Kiswoyo Adi Joe attributed the drop in raw material imports to the steel and tin plate industry players that had started using local raw materials.

'€œThe fall in capital goods was actually normal because the manufacturing industry imported lots of machines last year, with many of the players expanding,'€ he said.

'€œSo, it is normal to see a slowdown this year.'€

Lutfi said the country was currently '€œtransforming'€ into a finished-goods exporter, therefore, a slight slowdown in exports was expected.

The trend, he said, would rebound as the country developed its manufacturing industry.

For example, the country is currently seeking to develop the cocoa industry, with talks still underway to abolish the 5 percent import duty on cocoa beans to help supply the downstream industry.

'€œHopefully, the talks will be finalized next week,'€ Lutfi said.

Apart from the plan to scrap the import duty, the government has since 2010 imposed a 15 percent export duty on raw cocoa in 2010 to increase domestic supply and encourage growth of the processing industry.

Earlier On Tuesday, Finance Minister Chatib Basri and Industry Minister MS Hidayat met to discuss fiscal incentives and industrial policies for manufactured goods exporters to increase exports of goods with added value and decrease dependence on imported raw materials.

Lutfi said Indonesia should be able to reach its export target of $190 billion this year '€” the same level as that in 2012 or up by 4 percent from total exports last year '€” if it remained committed to no longer exporting basic or raw commodities and to lowering imports of finished or half-finished goods.

High imports and low exports brought the country'€™s trade balance to a $4.03 billion deficit throughout last year. That also cost the current account a deficit of $28.5 billion last year, or 3.3 percent of the gross domestic product (GDP).

The government has also rolled out a set of regulations to reduce imports and boost exports in an effort to narrow the country'€™s broadest measurement of trade. (dwa)

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