Indonesia’s latest trade figures, which recorded a surplus in the first quarter of 2018, while welcome, nonetheless show a continued reliance on raw commodities.

The Central Statistics Agency (BPS) announced on Monday that in the first quarter of 2018 Indonesia booked a trade surplus of US$1.09 billion.

“Non-oil and gas exports stood at $2.02 billion in March,” BPS chief Suhariyanto told a monthly press briefing on Monday.

The good news came after the country had suffered a ballooning trade deficit in the first two months of 2018. In January, the country experienced a $670 million trade deficit, an unusual situation in the past three years, in which January has usually seen trade surpluses. The deficit was caused by a significant import surge of 26.44 percent year on year (yoy) to $15.13 billion and moderate export growth of 7.86 percent yoy to $14.46 billion.

The country also suffered a $100 million deficit in February.

The Institute for Development of Economics and Finance (Indef) has urged the government to seize the opportunity to boost the production of the country’s top commodities, such as crude palm oil (CPO) and coal.

“We are in a commodity boom, and also because of the involvement of the United States in Syria, we could see the price of oil go up to more than $70 per barrel,” Indef researcher Bhima Yudhistira Adhinegara said. Bhima urged the government to increase exports, especially of oil substitutes like CPO and coal.

In March, Indonesia booked a surge in the mineral fuel exports of $2.2 billion, an 18.58 percent increase from the previous month. Mineral fuels were in the top 10 primary Indonesian exports, making up almost half of the country’s total exports.

However, only two of those 10 export categories were manufactured products, namely shoes and vessels, which contributed 3.18 percent and 0.19 percent, respectively, to total exports between January and March.

“If we want to export more manufactured products, then the government must pay more attention to industry,” said deputy chairman of the Indonesian Chamber of Commerce and Industry (Kadin), Raden Pardede.

Raden also suggested the government provide incentives for manufacturers wanting to boost production or exports.

As the country’s exports are mainly made up of raw commodities, Indonesia’s economy will continue to be affected by global trends, including the likelihood of a trade war between the US and China, as well as competition from other countries, said Bhima.

“This is the perfect time for us to invest in value-added products that we can export, such as electronics and cars,” he said.

The Indonesian Employers Association (Apindo), however, is convinced that in the event of an all-out trade war between China and the US, Indonesia could stand to gain from the conflict.

“It may lead to problems on one side but also opportunities. For example, if the US decides to impose new tariffs on certain commodities from China, then our producers could replace them,” Apindo deputy chairperson Shinta Widjaja Kamdani said.

Data from the BPS shows that Indonesia’s top partners in non-oil and gas trade as of March 2018 continued to be the US, China and Japan, which accounted for more than 30 percent of the country’s total trade value.

Apindo believes that Indonesia could see more economic growth and stability if the country opened up more trade with non-traditional markets.

“We have at least 22 trade partnerships that need to be finished as soon as possible, and this includes the Regional Comprehensive Economic Partnership,” she said, referring to the mega-regional economic agreement being negotiated between the 10 ASEAN governments and their six FTA partners — Australia, China, India, Japan, New Zealand and South Korea.

As the country will soon enter the Ramadhan fasting month, it is also crucial for the government to maintain low imports of food products.

“The March [trade balance] data shows that our imports were lower than usual, even as we approach Ramadhan, the period during which we usually see imports soar,” said Bhima of Indef. “Having said that, the distribution of homegrown products for Ramadhan must be maintained to avoid unnecessary imports,” he said.

Consumer goods imports declined by 12.8 percent in March compared to the previous month following a government decision to restrict rice imports, the BPS said.

Meanwhile, imports of industrial materials and capital goods, which make up over 90 percent of the total, increased by 18.35 and 27.72 percent yoy, respectively.

“Lots of raw materials for manufacturing spin the wheels of the economy,” Suhariyanto of the BPS said.

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