Looking at the structure or composition of Indonesia’s mom oil & gas export, the challenge that must become the attention of the government and the stakeholders is haw to increase added-value export. In the presentation of analysis on Indonesia’s trade performance in June 2012, Vice Minister of Trade, Bayu Krisnamurthi, in Jakarta on Tuesday (7/3) explained that based on UN Statistic Classification, Indonesia’s export structure is dominated by primary commodities and primary industry products (65%), while import is dominated by secondary industry and advanced industry products which reaches 62.9%.
Primary commodities that have a big contribution to export value are, amongst others: mineral fuels (35.4%); animal or vegetable fats and oils (10.8%), rubber (4.5%), ores, slag, and ash (3%); fish and prawns (1.4); and copper (1.3%). Export of primary commodities in May 2012 reaches USD 10.5 billions or down 16.3% from the previous year, while export of manufacturing products reaches 32.2% or increases 8.4%. In January – May 2012, export of primary commodities increases 33.2% to USD 52.7 billions from the previous year, while export of manufacturing products declines by 29.4% or USD 28.7 billions.
Accompanied by some echelon I officials, Bayu explained that primary commodities whose export value experience sharp decline in May 2012 if compared to the previous year are, amongst other, mineral fuels (7.11%); animal or vegetable fats and oil (46.82%); rubber (22.24%); tin (23.48%); and copper (63.79%). Decline in export value of the above commodities are due to decline of commodity prices in international market.
While, products that have influence over significant increase of import and contribute to non-oil and gas trade deficit in May 2012 are, amongst other: aeroplanea (increases by 182.6%), cell phones (increases 66.6%) electronic circuits (increases 54.9%); and loaders (increases 50.2%).
Looking at the trend of increase of import of cell phone products, the government will promote investment in cell phone products considering that so far, those who are locally made are only cell phone cases. There are four factors that affect import, namely price, quality, specification, and diversity of imported products. For example, automotive industry as part of international manufacturing system, even though they are produced in Indonesia, import of Indonesian components originates from various countries.
Cumulatively, trade balance of January – May 2012 is USD 1.5 billions in surplus (down by 87%). Products whose import increases sharply in January – May 2012 that it reduces trade surplus are, amongst other: aeroplanes (increases by 112.6%); cell phone (increases 22.2%); and potassium chloride (16.5%). In the future, this should be anticipated considering that activity of import of these kinds of products will continue as domestic demand increases continuously.
“Actually, the activity of import of raw & auxiliary materials and intermediate goods will increase continuously, where at the same time, we are working to reduce import of consumptive goods. Commonly, import of intermediate goods as part of the industry is for the purpose of increasing productivity. That is the reason why Indonesia must not concentrate on producing finished products, but must also consider producing the raw material”, said Bayu who was accompanied by Chairman of KADIN (Indonesian Chamber of Commerce and Industry) Committee for Productivity Increase, Gunadi Sindhuwinata. Therefore, industry deepening structure is also required.
Business News - July 6, 2012