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Jakarta, Jan 9 (ANTARA) - In the wake of predictions that its exports will decline due to the global financial crisis, Indonesia is trying to diversify its export markets and launch diplomacy overseas to win new export destinations.
"In the face of the negative impact of the global crisis such as reduced demand for our export goods, the government will pursue a market-seeking diplomacy as a top priority in 2009," Foreign Minister Hassan Wirayuda said.
Indonesia's efforts to expand markets are made in line with predictions that its export performance will slow down in 2009.
The main problems facing the country's exports in 2009 would be the declining demand such as in the US, Japan and the European Union, rising protectionism in the destination markets and declining prices of commodities.
According to Bank Indonesia (BI) Deputy Governor Hartardi, exports and services would fall steeply to a growth of 4.3 percent to 6.1 percent in 2009 from 13.7 percent in 2008.
In the period of January-October, 2008, Indonesia's total exports reached a value of US$ 118.5 billion. The number represents an increase compared to the same period in 2007.
Trade Minister Mari Pangestu said the country's non-oil and gas exports, for example, would grow maximally 8.0 percent in 2009 as the world's economic growth weakened as a result of the global financial crisis.
She said the 8.0 percent figure could be achieved if the world trade grew by 4.4 percent. If the world trade grew only 3.6 percent or 3.4 percent Indonesia's non-oil and gas exports were predicted to grow only six percent and 4.3 percent.
The 4.3 percent - 8 percent non oil/gas growth projection may still change in view of export market conditions and the competitiveness of domestic industries.
"Whether the change will be rapid or slow depends upon the development of the current crisis or whether the crisis could be overcome quickly or otherwise. If it cannot be controlled the projection may still change in every country," the head of the trade ministry's research and development agency, Muchtar, said.
He said growth in the exports to the main destinations such as the US and Japan, would be lower than this year's 11 to 12 percent respectively.
"For the main export destination countries like the US and Japan the growth will not be far from 6.0 and 5.57 percent," he said.
As the prospect of exports is bleak in 2009, the Indonesian Chamber of Commerce and Industry (Kadin) suggested that domestic market should be empowered.
"Our main problem is the deteriorating performance of our exports. That is the problem which has to be solved. The government should focus its attention on the domestic market and on supporting labor-intensive industries, including the support industries at home," Kadin Chairman MS Hidayat said.
He said what needed to be urgently done to create alternative markets for Indonesia's exports was empowerment of its domestic market so that this market could absorb the commodities otherwise intended for export.
According to the Kadin chairman, domestic market should be empowered because it would be difficult for the government to implement its plan of expanding to new export markets.
"We would have to set up networks in the new export markets. And our banking system must also match with those in the new markets. And accomplishing all this will not be easy," he said.
But through optimal foreign diplomacy, Foreign Minister Hassan Wirayudha hoped new markets could be created overseas.
"We will seek to gain access to new non-traditional export markets such as Russia, East Europe, Africa and Latin America," Wirayuda said.
The export market expansion or diversification effort is important to ensure the continuity of Indonesia's export business as one of the contributors to its economic growth.
Therefore, the minister said, Indonesia's diplomatic activity which had generated political closeness with other countries should be turned into economic benefit and be strengthened further in order to help the government's tasks in promoting the country's trade, investment, tourism and manpower potentials.
Thanks to diplomacy, Indonesia would at least have easy access for exports, for example, to the Middle East after it reached an agreement with Saudi Arabia.
"Our exports will increase thanks to cooperation," secretary general of the National Accreditation Committee (KAN) Sunarya said after signing an agreement with a Saudi Arabian Standards Organization (SASO) here Thursday.
"If our products do not have a national standardization (SNI) and follow the qualifications in SASO, the products might have to be tested according to SASO regulations and earn a logo to be accepted in Saudi Arabia," he said.
The organization has 14,600 product standards according to international standards which are accepted to all Gulf countries. Some products such as clothes, household electronic devices, and automotive products have more prospects in the Saudi Arabian market.
Actually, Indonesia has made expansion in new emerging markets. According to Trade Minister Marie Pangestu, Indonesia's exports to Europe in 2003 accounted for 19 percent of its overall exports but the figure dropped to 1.5 percent in 2008 while its exports to the United States fell from 15 percent (of overall exports) in 2003 to 11.3 percent in 2008.
"The reductions in these overseas market shares indicate that there has been market diversification in Indonesia's exports which go to newly emerging markets such as China where Indonesia's market share increased from 6 percent to 8 percent, India from 3 percent to 6 percent and in ASEAN countries," the minister said.***2*** (T.A014/A/HAJM/A/S012) 20:15/... ) 09-01-2009 20:37:42
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