ASEAN KEY DESTINATIONS
Govt cautious amid weakness in international trade
The government will remain cautious amid ongoing weakness in international trade, despite having booked a trade surplus in the first eight months of this year, the trade minister has said.
Lower-than-expected global trade growth may pose volatility for the country’s trade balance, according to Trade Minister Thomas Trikasih Lembong. Indonesia’s trade balance has been seeing a surplus because imports dropped steeper than exports slumped.
Thomas said in a press conference on Wednesday that the government had to stay alert on the unpredictability of the country’s trade balance driven by a challenging global environment.
He added that “global trade growth has hit a lower level compared to that of global economic growth over the last three years”, diverging from its normal course.
In regards to the challenging global economic situation, Thomas refused to say whether his ministry would stick with a target set by his predecessor, Rachmat Gobel, to triple the country’s total exports by 2019.
While the country recorded US$6.22 billion in trade surplus in the January-August period of this year, its total exports and imports slumped by 12.7 percent and 18.96 percent year-on-year (yoy), respectively.
The declining exports and imports have indicated that many industries in the country are still facing a slowdown.
Thomas said that his ministry would work hard to boost the country’s exports and rationalize imports amid the current sluggish economy.
Under an economic policy package previously launched by President Joko “Jokowi” Widodo, the Trade Ministry is set to revise or deregulate 32 rules comprising 30 ministerial regulations and two other regulations to help spur the country’s economic growth, which hit a six-year low level of 4.7 percent in the first half of this year.
The ministry is currently still coordinating with related ministries to finalize the revisions and deregulations.
The revisions and deregulation are expected to ease both exporters and importers of certain products deemed to boost local industries.
Separately, the Trade Ministry’s director general for international trade cooperation, Bachrul Chairi, said his ministry also expected that at least three free trade agreements (FTAs) could be concluded by the middle of next year.
He said he was upbeat that the Regional Comprehensive Economic Partnership (RCEP) could be resumed in the middle of next year, while a Korea-Indonesia FTA and Indonesia-EU FTA could be concluded by year-end once the president and the Coordinating Economic Ministry provided detailed necessary guidance.
Bachrul said the FTAs would definitely help Indonesia boost its exports to the FTA partners.
“For sure, we’ll get a huge benefit. The RCEP alone, for example, accounts for around 30 to 40 percent of global trade,” he said.
The RCEP will cover 10 ASEAN member countries, including Indonesia, and their six major trading partners — China, Japan, India, South Korea, Australia and New Zealand — to create an integrated market worth $21.4 trillion by 2025.
The Indonesia-EU FTA, meanwhile, was forecast to boost Indonesia’s export value to the 28-member block by $7 billion, Bachrul said.
Indonesia’s non-oil and gas exports to the EU stood at around $10 billion in the first eight months of this year, or 11.2 percent of the country’s total non-oil and gas exports of $89.6 billion during the period, according to data from the Central Statistics Agency (BPS).
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