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Despite a weaker rupiah, non-oil and gas exports drop

The country’s major non-oil and gas exports in the first two months of the year dropped despite the rupiah depreciating against the US dollar, which should have increased competitiveness

Linda Yulisman (The Jakarta Post)
Jakarta
Wed, March 18, 2015

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Despite a weaker rupiah, non-oil and gas exports drop

The country'€™s major non-oil and gas exports in the first two months of the year dropped despite the rupiah depreciating against the US dollar, which should have increased competitiveness.

The shipment of two main commodities, palm oil and coal, declined by 8.1 percent to US$2.99 billion and by 18.7 percent to $2.9 billion in the January-February period compared to the same period last year, according to the latest data from the Trade Ministry. The delivery of other commodities as well as manufactured goods also fell sharply.

Overseas shipments of chemical products, for instance, plunged by 38.8 percent to $440.3 billion, while exports of rubber and rubber products slumped by 34.7 percent to $909.6 million.

Similarly, exports of key manufactured goods '€” apparel '€” slipped by 8.1 percent to $636.8 million.

Indonesian Textile Association (API) chairman Ade Sudrajat said shrinking exports were attributed to weak demand in the main export destinations, the US and the EU, due to a prolonged crisis, a condition where even a weaker rupiah could not help boost demand.

'€œThe exports will likely decrease in the coming months unless there are some measures taken by the government to boost competitiveness,'€ he said, adding that an ease in the imports of raw materials was necessary for export-oriented production.

Indonesian Rubber Association (Gapkindo) executive director Rusdan Dalimunthe pointed out a decline in rubber export volume as a factor that had pushed down its export value.

'€œThe volume that we can sell overseas has decreased as growers move to other jobs as the price of rubber persistently falls,'€ he said.

Plunging energy prices have dragged commodity prices to a 12-year low as the dollar'€™s best rally since 2008 effectively cut the investment appeal of raw materials amid surpluses of various commodities from oil to sugar, Bloomberg reported.

The Bloomberg Commodity Index slipped 1.4 percent to 97.5777, the lowest since August 2002. The Bloomberg Dollar Spot Index, which measures the greenback against 10 currencies, is set to climb the most since 2008 this quarter and reached its peak in data going back to the end of 2004.

Already exceeding its psychological level of Rp 13,000 per US dollar, the rupiah has been Asia'€™s worst-performing currency this year.

The government expects the rupiah'€™s depreciation will increase the competitive edge of Indonesia'€™s exports, but the latest trade statistics suggest otherwise.

Contrary to the continuing fall of exports and slumping commodity prices, however, the government remains upbeat that Indonesia'€™s exports will gain and has prepared a set of incentives to meet that end.

'€œThis is an opportunity for us to boost exports. If I am asked whether I'€™m optimistic, well I'€™m optimistic,'€ said Trade Minister Rachmat Gobel during a press conference on foreign trade performance on Tuesday.

Rachmat added that a discussion was underway in the government to map out incentives to support exporters, such as simplified custom procedures at export gateways.

Trade Ministry trade policy research and development head Tjahya Widayanti said Indonesia would likely expand its shipments of goods with high local content that were less dependent on local currency depreciation.

 

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