I

ndonesia may achieve its ambitious target of tripling its exports by 2019, but it will require significant breakthroughs in industrial development and export promotion as well as investment, economists have warned.

The sizeable target has sparked controversy, partly because it was set at a time when the country, a consumer spending-driven economy, struggled to sell its commodities and goods overseas amid weak demand.

Overall exports declined slightly by 3.43 percent to US$176.29 billion last year from the previous year, while non-oil and gas shipments '€” the main contributor to exports '€” dipped by 2.64 percent to $145.96 billion.

Center of Reform on Economics (CORE) Indonesia executive director Hendri Saparini said Indonesia had great potential to achieve the target, but required integrated policies and support in the National Mid-Term Development Plan (RPJMN).

'€œThe target to increase exports by 300 percent is not overly optimistic, but it involves issues such as fiscal incentives and labor [supply],'€ she said in a discussion on exports hosted by the Trade Ministry on Monday.

Hendri added that the current priority would be to strengthen the country'€™s role as a production base for manufactured goods, as seen in the 1990s before the Asian financial crisis hit.

During that period, manufactured products amounted to as much as 67 percent of total exports, with the rest being commodities. By contrast, such goods now only make up 37 percent of overall exports as commodities now dominate.

Apart from appropriate industrial policies, Indonesia also needed suitable investment to help generate export products and solid marketing strategies to sell them in specific target markets, Hendri said.

Voicing similar concerns, A. Tony Prasetiantono, a public policy expert from Gadjah Mada University (UGM), pointed out the urgent need to strengthen the structure of domestic industry, which would not only help boost exports, but also reduce imports.

'€œMy concern is how to return to surplus. Surpluses and deficits used to be affected more by external factors, but in recent years they'€™ve resulted largely from internal factors,'€ he said, referring to trade deficits resulting from weaker exports of commodities like palm oil and coal.

Meanwhile, University of Indonesia (UI) economist Faisal Basri said the target was simply impossible to achieve for several reasons, such as dwindling crude oil production, slow expansion of manufacturing industry and weak demand in Indonesia'€™s major export destinations.

Faisal said the development of the services sector had outpaced manufacturing industry as the latter still struggled with regulatory hurdles, such as land acquisition woes.

According to Faisal, Indonesian exporters prefer to trade with European countries and the United States, regions which have been struggling with the prolonged economic crisis, while other Southeast Asian peers have boosted trade with partners in ASEAN and others in Asia, such as China, Japan and South Korea, where purchases remain relatively sustained.

'€œIndonesian exports to ASEAN and Asian countries are on the decline, while [exports] to other countries, such as European countries and US are climbing. This is in contrast with the trend seen in other ASEAN countries, which embrace more trade within Asia,'€ he said.