RI UPBEAT OVER EXPORTS AMID GLOBAL ECONOMIC SLOWDOWN

By Andi Abdussalam

     Jakarta, 24 (ANTARA) - Indonesia is still optimistic that its export performance will  remain encouraging in 2008 although the on-going economic crisis is slowing down global economic growth.
     "Non-oil export growth in 2008 is expected to reach the targeted 12.5 percent. Exports would continue to grow because the prospects of a number of processed industrial products, particularly in the automotive sector, in overseas markets are improving," Trade Minister Mari Elka Pangestu said on Monday.
     The minister's optimism came up amid economic difficulties due to fuel oil price hikes that fueled inflation, reduced people's purchasing power and slowed down the production of export goods.
     The World Bank last April revised downward its Indonesian economic growth rate forecast for this year to 6 percent from 6.4 percent previously due to a possible decline in the country's exports as a result of a global economic slowdown.
     According to the World Bank, Indonesia's exports which grew 8 percent last year will slow 7 percent this year while domestic demand, particularly investment and consumption will remain strong, the World Bank said in a report.
     Earlier this month, the Central Bureau of Statistics (BPS) reported that Indonesia's trade balance totaling US$530 million in April was unfavorable as exports only reached a value of US$10.97 billion while imports totaled US$11.50 billion.
     BPS chief Rusman Heriawan said exports in April declined by 7.78 percent compared to March but represented an increase of 23.09 percent compared to the figure in April 2007.
     Non-oil/non-gas exports declined by 7.08 percent to US$8.49 billion while oil and gas exports dropped by 10.11 percent to US$2.48 billion.
     However, Trade Minister Mari Elka Pangestu expressed optimism that Indonesia's non-oil/non-gas exports will grow at the target rate of 12 percent - 14.5 percent this year despite an unfavorable trade balance in April.
     "That (the deficit) is only for one month. We have to see the trend which shows further growth," the minister said on the sidelines of an Indonesia Cultural Week (PPBI).
     Yet, she admitted that the fuel price hike last May had raised production costs, reduced the items of traded goods and caused a decline in the volume of Indonesia's exports.
     "Actually, the fuel oil price hike should have boosted the value of the country's exports because sales prices have risen but in real terms, the increase in the oil prices has lowered the volume of exports," the minister told the House of Representatives (DPR)'s Commission VI which deals with trade affairs here on Monday.
     The trade minister said that Indonesia's exports last year reached US$118 billion while this year it is projected at US$135.5 billion.
     The government has previously set an export growth for 2008 at 14.5 percent and economic growth at 6.8 percent. It later revised them  downward to 11.2 percent and 6.4 percent respectively.
     When the price of world crude reached over US$125 per barrel, the government once again revised its economic growth target from 6.4 percent to 6 percent but maintained its export target at 11.4 percent.
     "We did not revise the export growth target. The growth target of domestic consumption and of investment was, however, cut by about 0.5 percent," Pangestu said.
     She predicted that though export growth would slow down, export performance would be relatively stable in 2008.
     The percentage of Indonesia's exports against the country's gross domestic product (GDP) was predicted to remain the same as in the period a year earlier.
     "The value of our exports compared with the GDP is relatively stable at about 29.3 percent. The level of this percentage does not change much compared with that during the fuel oil price hike in 2005 and the increase in the oil price in the world market in 2007," the minister said.
     According to BPS Chief Heriawan, crude palm oil (CPO) was the biggest contributor to the decline in non-oil/non-gas exports in April which only reached a total value of US$1.133 billion.
     Pangestu said the decline in CPO exports was due to a fall in the commodity's price in international markets during April from US$1,249 to US$1,174 per metric ton. An additional factor was the imposition of a 20-percent tax on CPO exports.
     Meanwhile, imports in April were reported to reach US$11.50 billion or an increase of some 14.86 percent compared to March.
     Import of consumer and capital goods rose by 7.51 percent and 14.34 percent respectively while import of raw materials and supplementary goods dropped slightly from 78.54 percent to 78.15 percent.
     BPS data showed overall imports in the January-April period reached a total value of US$40.95 billion which comprised US$9.73 billion for oil and gas products (up 23.76 percent) and US$31.22 billion for non-oil/non-gas products (up 76.24 percent).
     Indonesia's exports grew to a record $100.7 billion in 2006, an increase of 17.5% from 2005. The largest export commodities for 2006 were oil and gas (21.2%), minerals (15.7%), electrical appliances (14.7%), rubber products (6.9%), and textiles (3.4%).

(T.A014/A/HAJM/18:05/a014)(T.A014/A/A014/A/A014) 24-06-2008 18:10:48