INDONESIA EXPORT

Exports to Rise in Q2 on Global Recovery

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The government is confident that the country’s trade outlook will improve throughout this year on the back of global economic recovery and stronger demand for manufactured goods.

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Trade Minister Muhammad Lutfi said Tuesday that an upward trend in exports may start at the end of the first quarter and continue to rise with more positive developments in the global economy.

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“Exports usually decline in January and this is cyclical. I am optimistic that exports will rebound in the coming months starting from March,” he told reporters at his office.

Southeast Asia’s largest economy had been anticipating stagnant exports this year as slow global recovery may still weaken demand.

The government has said that overall exports were estimated to reach about US$180 billion in 2014, similar to last year’s $182.57 billion.

Earlier, Finance Minister Chatib Basri said the trade deficit in January was “temporary”.

Chatib said that exports were expected to increase, apparently following the government’s move to modify the tax payment program for exporters (KITE), which came into effect in February.

The new regulation is expected to make it easier for export-oriented industries to import raw materials and capital goods.

Indonesia’s exports dropped 14.63 percent on a monthly basis from December and by 5.79 percent on a yearly basis from the past year to $14.48 billion in January.

The drop mainly resulted from a decline in non-oil and gas exports — the biggest component in overall exports — by 11.6 percent month-on-month and 5.76 percent year-on-year basis to $11.99 billion in the first month of the year.

The decline is highly attributed to the mineral ore export ban that Indonesia, one of the world’s top producers of minerals like copper and bauxite, implemented on Jan. 12.

Exports of ore, slag and ashes plunged 70.13 percent to $685.2 million in January from the previous month.

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The decline in mineral exports contributed to the $430.6 million deficit in the trade balance, which emerged after three consecutive months of surplus at the end of last year.

Lutfi acknowledged that the reduction in exports of unprocessed ore would continue to have a negative impact on exports, but said that encouraging prospects also emerged from growing demand both in traditional and non-traditional markets and surging outbound shipments of manufactured goods.

When the potentials materialize, Indonesia’s trade balance could endure shocks stemming from shrinking mineral exports, according to Lutfi.

Non-oil and gas exports to China, which represented 15.2 percent of total non-oil and gas exports in January, rose 22.6 percent to $1.82 billion, while outbound shipments to the United States gained by 1.5 percent to $1.29 billion.

“As the world economy is on the way to recovery, we are not being left behind and are also experiencing an acceleration of export expansion,” Lutfi said.

Exports to certain new destinations also increased markedly in January, according to trade statistics. The biggest increase in exports was seen in Peru, where purchases of goods from Indonesia climbed 186.5 percent to $19.6 million, followed by Nigeria with exports up 116.9 percent to $38.1 million and United Arab Emirates up 115.5 percent to $138.4 million.

January’s trade balance also received a boost from exports of certain manufactured goods, such as engines and mechanical machines and various chemical products, which rose by 33.7 percent to $606.4 million and by 26.5 percent to $393.2 million. (Linda Yulisman, The Jakarta Post)

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