Trade Expo Indonesia 2019, held in Jakarta this week, is expected to bring in $9.6 billion in trade and investment deals. (SP Photo/Ruht Semiono)

Expo Raises Hopes for a Trade Boost

BY :ARNOLDUS KRISTIANUS & ABDUL MUSLIM & HERMAN

OCTOBER 17, 2019

Jakarta. The government is optimistic that an international trade exhibition will help the country overcome a persistent trade deficit. 

Trade Expo Indonesia 2019, held in Jakarta this week, is expected to bring in $9.6 billion in trade and investment deals, Trade Minister Enggartiasto Lukita said on Wednesday. Total transactions worth $8.45 billion were recorded during last year's event.

"Hopefully, it can increase total exports and investment transactions by 15 percent from last year," Enggartiasto said at Indonesia Convention Exhibition at BSD City in Tangerang, Banten. 

The minister said this year marked the third time the expo was held without funding from the state budget, thanks to cooperation between local entrepreneurs and trade partners.

According to trade ministry data, 1,497 local companies are exhibiting their products and services at this year's event, ranging from cars and machinery to food, beverages and handicrafts.  More than 6,000 buyers from 120 countries had registered to attend the expo as of Tuesday. 

Indonesia has recorded a persistent trade deficit over the past nine months. The Central Statistics Agency (BPS) announced on Tuesday that the country had returned to a monthly trade deficit in September, with total exports amounting to $161 billion less than imports. 

The country had a $112.4 million trade surplus in August.

Indonesia's exports have been falling for 11 months in a row, as the ongoing trade war between the United States and China and a global economic slowdown continued to drive down demand for its main commodities – coal and palm oil. 

 

 

Deficit in Oil

A persistent shortfall in Indonesia's oil and gas trade worsened its overall trade balance. The country's oil and gas trade accumulated a $6.4 billion deficit between January and September this year period, narrowing from a $9.5 billion deficit in the same period last year. 

The government has been pushing its B20 program since last year, which is aimed at replacing diesel with biodiesel containing 20 percent palm oil-based fuel. The government plans to upgrade the program to B30 in January next year, increasing the palm oil-based fuel content to 30 percent. 

But some observers believe it may need to do more to contain the country's trade deficit. 

"In accordance with his campaign promises, President Joko Widodo must start the B100 biodiesel program immediately. Importing diesel fuel has been a heavy burden on the state budget and prevented the trade balance from turning to a positive trend," said Bima Yudhistira, an economist at the Institute for Development of Economics and Finance (Indef). 

Silver Lining

Besides oil and gas, Indonesia still posted a surplus against its trading partners. The non-oil and gas surplus stood at $4.5 billion in the first nine months of this year, down from $5.6 billion in the same period last year. 

Vehicles and spare parts, iron and steel, as well as jewelry, were star performers among export commodities, which all clocked double-digit export growth this year, compared with an 18 percent decline in palm oil shipments. 

Toyota Motor Manufacturing Indonesia, the local unit of the Japanese automotive giant, said its exports had exceeded 158,700 cars in the first nine months this year, up 3 percent from last year. Toyota has made Indonesia its production base for its Innova multi-purpose vehicles and Fortuner sport utility vehicles in Asia-Pacific, the Middle East, Central America, South America and Africa.

"We have experienced difficulties in our export performance. All these experiences have become a valuable lesson in developing the next strategic steps," Toyota Motor president director Warih Andang Tjahjono said in a statement.

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