NOW ASIA IS INDONESIA’S MAIN EXPORT DESTINATION FOR NON OIL-GAS COMMODITIES

Indonesia’s export of non oil-gas commodities to the markets of ASEAN, China, India, Japan and South Korea today constituted nearly 60 percent of total national export volume. Therefore, according to the Executive Director and Senior Economists of Standard Chartered Bank, Fazi Ichsan it was only natural if the Asia region served as main destination of Indonesia’s export of non oil gas commodities such as manufacturing, as part of market diversification strategy. In his presentation as speaker at the business forum with business people at the Ministry of Industry, Ichsan stated that, apart from market diversification, other necessary measures would be to ease or facilitate import-export as well as to ease trade financing. Ichsan made his presentation entitled “Anticipating the Impact of Economic Crisis in America and Europe on the National Industrial Sector” on Friday (30/9).

Asia markets were rated as fast growing markets, moreover economic growth in emerging Asian countries were rated as new magnet in the world’s economic system. “Indonesia’s domestic economy is still solid, resting on three sound cornerstones (1) domestic consumption which was constantly growing, where the middle income group constitutes 10 percent of population or equal to the total population of Malaysia (2) Commodity prices which are considerably good (3) booming investment in infra-structure”.

This was notable because even without super infra structure Indonesia’s economy Indonesia could score growth of 6.5% More over if infra structure in Indonesia could grow to the level of 8 percent as in China. “The question is why is it so hard build toll roads? Naturally toll roads are an important part of infra structure. If infra structure were adequate cost could be downpressed. If production cost were low the process of production could be more efficient and the end result would be more competitive. In the process of de-centralization, infra structure are today most needed outside Java. That is the reason why a grand design is needed for the next five to ten years” Fauzi Ichsan remarked.

Predicting commodity prices, Fauzi remarked that global warming had injured global harvest which in the end triggered increase of Bank interest in the market of growing countries in 2010. Vulnerability of global stockmarket in 2011 triggered prices of precious metal like gold or silver which were regarded as safe assets. However slowdown of global economy limited commodity prices. Commodity prices were predicted rebound in 2013. As with Indonesia, growth in 2012 was predicted at 6.5 percent and inflation would be around 6 percent.

Meanwhile economist Mirza Aditryaswara in that opportunity disclosed that to anticipate potential crisis that might happen in 2012, the condition of Rupiah and foreign currencies must have good liquidity; even if there were lowered commodity prices, inflation must be under control, presumably around 5 percent. In fiscal, acceleration of projects execution would be necessary while liquidation of funds be made easy. About the demand select and limit export (of certain products) like raw rattan and bauxite Mirza said that the condition was a matter of international negotiation. Meaning if Indonesia totally prohibited the raw materials, advanced countries like China and Japan who needed supply of raw rattan and coal in large quantity would demand Indonesia to stick to the commitment of the agreement.

Therefore Mirza insisted that the condition of Indonesia’s macro economy in terms of trade balance and goods and services remained to be in state of surplus, meaning the kind of commodities exported were only those of added value; also importing should be wisely done, so the products imported were only those not available in Indonesia. “Things should not be in the way it is happening now where imported consumers goods were more than capital goods, which was because the value of Rupiah were lower than USD” Mirza added.

In that opportunity the Minister of Industry M.S. Hidayat set forth the present crisis was not too disheartening, athough admittedly there was lowered demand from Indonesia’s trade counterparts i.e. America and Europe which was due to decrease demand in the said countries. The point was their purchasing power and priorities. Accordingly export should be more selective, not just to sell raw materials but commodities of added value.