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NEWS UPDATES Asean Affairs    3 October 2012

Indonesia adds more value-added products in exports

03-Oct-2012

Despite a continuing slip in monthly exports, Indonesia's export structure has improved as shown by a rise in shipments of more value-added products, a trade official says.

Exports from January to July had indicated a bigger proportion of finished products, which implied a shift from upstream products to downstream products, Deputy Trade Minister Bayu Krisnamurthi said yesterday in Jakarta.

Shares of garments to exports of textile and textile products rose to 60.95 per cent in the January–July period from 59.65 per cent a year earlier, while shares of yarn and fibers declined to 35.95 per cent during the month from 37.78 per cent in the past year, he said.

"Indeed, the increase is still very small, but this is a positive indication that our export structure has improved, composed of more value-added products," Krisnamurthi said during a press conference at his office.

A similar trend can also be found in exports of electronics and automotive products, according to Krisnamurthi.

Shares of printing machines, which are manufactured locally, to total electronics exports, for example, increased to 15.2 per cent in the designated period from 6.7 per cent last year, while contributions of electronic components dropped to 37 per cent from 40.65 per cent on an annual basis.

Shares of four wheelers also climbed to 3.44 per cent to total automotive exports from 0.88 per cent, in contrast to contributions of automotive components, which shrank to 31.2 per cent from 37.83 per cent.

"These are preliminary changes, but they indicate that our export competitiveness is growing. Whenever there is pressure from price declines due to the global economic recovery, our capacity to export will be higher," Krisnamurthi further said.

Indonesia's monthly exports in August fell by 24.30 per cent to US$14.12 billion from a year earlier, while imports dropped by 8.02 per cent to $13.87 billion, resulting in a surplus of $248.5 million — the first trade surplus after deficits in four consecutive months starting from April.

From January to August, exports totalled $127.17 billion, down by 5.58 per cent from a year earlier, while imports amounted to $126.67 billion, up by 10.28 per cent from last year.

Indonesian Institute of Sciences economist Latif Adam said that the government's claim on the improved export structure was "too early", as changes were made in "traditional" industrial sectors instead of processing natural commodities.

"These changes are still premature because they take place in the industrial sectors that have been well-developed in Indonesia," he said.

Adam further said that the claim would be properly placed whenever shares of value-added products in the industry endorsed by government, particularly in the refinery of mineral commodities, increased and this would likely take a longer period. Apart from that, the improvement in export structure should be followed by significant shifts in export destinations, he said.

The Institute for Development of Economic and Finance economist Ahmad Erani Yustika voiced a similar concern, saying that progress should be oriented towards the processing of natural resources, which currently made up the largest bulk of exports.


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