By Eliswan Azly
Jakarta (ANTARA News) - The US financial crisis which is affecting economic growth in Asia, including in the largest archipelagic country in the world , is expected to cause Indonesia`s exports to drop in 2009.
The impact of the US crisis will not directly reduce Indonesia`s export performance this year but next year as the country`s exports to the US are not significant , reaching only 11.6 percent, Trade Minister Mari Pangestu said here on Tuesday.
"We are optimistic the target of a 12-percent increase in exports this year will be achieved. But next year, there will be a downward trend, something that will be faced by all countries including Indonesia," she said.
According to her, Indonesia`s oil and gas exports in the January - August period in 2008 increased by 30 percent and its non-oil/non-gas exports by about 22 percent.
But Mari said she was afraid that in 2009, a decline in commodity prices would adversely affect the country`s trade volume. "We can see that when the price increases, the volume drops. Now there will be a correction in terms of volume and value," she added.
Mari said Indonesia had to be able to take anticipatory steps as there would be a slowdown in demand for Indonesian goods next year. "This will depend on the global economic slowdown," she said.
In order to take anticipatory steps, the minister said, Indonesia would continue to diversify its export destinations to other countries such as to the Middle East and Asia.
"We will do what we did in 2003 when we diversified 19 of our markets to Europe. Now it will be 13 percent. And then from 40 percent to 12 percent in the United States. We will widen our export markets in China, India, South Korea, Taiwan and other Asian markets," she said.
She said the government would continue to expand its export markets to the Middle East, Russia, Central Europe and Asia.
"We have concluded regional agreements in Asia," she added.
Sharing similar opinion with the trade minister was Bambang Soesatyo, chairman of the Indonesian Chamber of Commerce and Industry (KADIN)`s fiscal and monetary committee, who said that in anticipation of the impact of the US financial crisis on Indonesia`s manufacturing sector, the government should step up its domestic purchasing power policy.
Bambang opined that the impact of the US financial crisis also tended to cause a financial recession in the European Union (EU).
"So that our manufacturing sector will also be trapped in the sluggish growth situation both in the US and the EU because the two regions have become main destinations of Indonesian exports," he said.
In a bid to prevent a collapse, the most ideal solution, according to Bambang, was that the Indonesian manufacturing sector could concentrate on the domestic market. But the fact was that industry was now facing a decline in people`s purchasing power.
Hence it is necessary for the government to step up efforts aimed at strengthening domestic market security against possible shift of exports to the US following a slump in demand in that country as a result of the current financial crisis.
Because of the unfavorable external conditions, the government had to secure the domestic market and stimulate domestic demand, he said.
He predicted that many countries would have applied protectionistic policies to protect their domestic market because of the world`s flagging economy.
In view of that, the government should also increase its lobbying with export destination countries to reduce trade barriers and tackle any dumping accusations.
According to him, Indonesia had to secure its domestic market from possible flow of imported goods that came legally or possibly illegally as well as dumping products.
Special incentives
In a bid to promote exports predicted to decline following the weakening global economy as a result of the financial crisis in the United States, the government was reported to be preparing special incentives.
"We will follow up the incentive suggestions along with the industry minister. We will hold a meeting this week to find the right incentives that will promote exports," the trade minister said.
Mari said however that caution was advised, especially towards the second round effect of the crisis on Asian countries such as China, Korea, Taiwan and Japan which are the main markets of Indonesian export products.
The government would nevertheless consider various policies that would keep exports from declining.
Commenting on incentives the government will have to give, Industry Minister Fahmi Idris said the government would gather inputs from the business community on what would be the best incentive for promoting exports.
However, before the end of this year he hoped the incentives would have been announced, Fahmi said.
He said the government meanwhile would soon revise Government Regulation Number 1 of 2007 on tax incentives for certain business sectors and regions.
"There are many sectors that will be added to the list of incentive recipients such as fishery, plantations and others," he said. (*)
Sources : http://www.antara.co.id/en/arc/2008/10/14/news-focus--indonesia-to-see-lower-exports-in-2009/