Govt Expects Non-Oil and Gas Exports to Rebound in 2016

Indonesia likely had a larger trade surplus in June compared to a month before, with both exports and imports seen growing at a much slower rate, a Reuters poll showed.(Reuters Photo/Darren Whiteside)

By : Vanesha Manuturi | on 6:36 PM January 18, 2016
Category : Business, Economy

Jakarta. The Indonesian government is hoping to boost export of non-oil and gas goods by 9 percent in 2016, following a near-10 percent decline last year against the backdrop of persistently sluggish global demand and low commodity prices.

"That's our official target but my hope, at least, is that the patterns of our trade remain stable. If last year's imports and exports saw some contraction, hopefully, there would be little to no contraction [this year]. We hope to see some turnaround,"  Trade Minister Thomas Lembong told a press conference in Jakarta on Monday, adding that he hoped to maintain export growth at an average of 11.5 percent annually for the next five years.

Thomas noted that textile products, clothing pieces and footwear, as well as processed food and beverages will likely be among the products championed for export this year.

Shipments of goods from Indonesia, which contributes to 24 percent of the economy, has taken multiple hits as prices of commodity goods as well as growth among some of its main trading partners, such as China, struggles to pick up.

Export, excluding oil and gas, declined by 9.77 percent last year to about $132 billion, while import fell by 12 percent to $118 billion. This led to a surplus of about $13.5 billion, compared to a $11.2 billion surplus the year before.

Still, David Sumual, economist at Bank Central Asia, deemed the export target to be "quite realistic," noting that export of manufacturing products would likely be more competitive with the weak rupiah, which has depreciated by almost 1 percent against the US dollar so far this year, after a much bigger fall in 2015.

Among the government's efforts to stimulate export, Thomas said he was looking to facilitate more small and medium businesses, which many say form the backbone of the Indonesian economy, to start offering their products overseas.

The ministry will also be continuing efforts in streamlining and simplifying regulations under its purview as a follow-up to the government's economic policy package launched last September, he added.

Future trade deals

Thomas also said that he will be undertaking discussions on trade agreements with several potential trading partners this year, such as a comprehensive economic partnership agreement with Australia and members of the European Union and countries that have joined the Trans-Pacific Partnership.

Last year, the Indonesian government signaled its interest to join the TPP, a trade pact led by the United States with 11 other countries that claims to be among the most ambitious trade deals so far.

"We will soon start negotiations for the EU CEPA [Comprehensive Economic Partnership Agreement]. There is also a cross-ministerial team that's learning about the TPP right now. Both of them are two big and ambitious deals," Thomas said.

Iman Pambagyo, a special staffer at the Trade Ministry in developing international trade policy, pointed out four trade agreements that the ministry would focus on this year, including a free trade agreement with Australia, the China-backed Regional Comprehensive Economic Partnership (RCEP), the EU CEPA, and a deal with member countries of the European Free Trade Association.

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