OBAMA'S VISIT UNLIKELY TO BOOST RI-US TRADE

By Andi Abdussalam

Jakarta, Nov 10 (ANTARA) - Different from government officials who saw US President Barack Obama's tour of Indonesia as a positive signal to bilateral trade, economic observer Tony Prasetiantono said the visit would not raise bilateral  trade volumes.           "I think it will  be difficult (for the two countries to increase their trade volume) because though we buy US products, they face competition from other nations. Its automotive products face competition from Japan as well as from South Korea. On the other hand, the United States is now trying to reduce its trade deficit which with China alone reaches US$250 million per annum," he said here on Wednesday.          In his speech at the University of Indonesia, Obama expressed optimism that trade between the two nations could be boosted.          "America has a stake in Indonesia that is growing, with prosperity that is broadly shared among the Indonesian people - because a rising middle class here means new markets for our goods, just as America is a market for yours ," Obama said.          He said that the United States was investing more in Indonesia, its exports had grown by nearly 50 percent, and it was opening doors for Americans and Indonesians to do business with one another.          According to Tony, if the superpower wanted to increase its trade with Indonesia it should first be prepared to have a bigger trade deficit with Indonesia.          "So, to my mind, Obama's statement that the United States is willing to become Indonesia's number one trade partner is only a mere statement. We should appreciate it as a statement and as a wish. But in reality the United States will have  difficulty becoming our  number one trade partner," he said.          He said that there was a structural problem which was difficult to solve in order to really raise Indonesia - US trade volume, after all , US products will  be facing competition from other countries.          "The competition is not seasonal in nature but its commodities face competition from many  substitutes from other countries. On the other hand, the United States must in fact be unwilling (to become Indonesia's number-one trade partner) because with China alone it is already overwhelmed. This is because number one trade partner would mean  exporting and importing much," he said.          Earlier, Chief Economic Minister Hatta Radjasa said that the United States constituted a big export destination for Indonesia goods. There were still many opportunities that could be developed by both nations, particularly in the trade sector.          "In term of trade volume and export destination, the United States ranked third and always gives us a surplus. Thus, it is a relatively big export destination country for Indonesia," he said.           He expressed hope that the trend of Indonesia-US trade would increase like that in 2008 when it reached US$21 billion.          "We admitted that it was going down slightly in 2009 but in 2010 it is now showing an upward trend, namely about US$21 billion where Indonesia has always enjoyed a surplus of about US$5 billion," he said.          The minister said that Indonesia must use Obama?s visit to secure ways to improve its economic conditions. Thus it would be able to increase the volume of the two countries' bilateral trade to US$35 billion and to attract US$1 billion  investment to Indonesia.          "Indonesia must use the opportunity to secure ways to improve its economic conditions. The value of their two-way trade has now reached S$20 billion but efforts must be made to raise it to US$35 billion," Hatta Rajasa said.           With President Barack Obama's visit to the country on Nov 9-10, Industry Ministry has projected US investment in Indonesia will hit a record high of US$1 billion in the next few years.           "US investment in Indonesia is relatively small compared to that of other Asian countries, such as Japan and South Korea. I hope it could increase following Obama's visit," Industry Minister MS Hidayat said.           He said the government would encourage US companies to invest in heavy-duty equipment and machinery industries. A number of US companies had so far invested in the heavy-duty equipment industry including Caterpillar Inc.           Caterpillar Inc. planned to invest US$500 million in Indonesia next year, he said.           Hidayat said that the arrival of Obama in Indonesia would boost US investment in Indonesia, particularly processing industrial sector.             "So far, the United States has made investments in oil, gas, mining and natural resources. I hope it would enter into other type of industry, such as heavy equipment industry," the minister said.              Deputy Trade Minister Mahendra Siregar said Obama's visit can be a means of showing Indonesia's ever-fast economic growth. He said that the United States was an important investment source so that the existing relations needed to continuously be improved to attract more investment and to benefit from trade activities.              Therefore, businesses of both nations needed to assess potentials for increased cooperation in the future. The United States is a main export destination for Indonesia. The value of Indonesia's trade with the United States continued to increase in the  2005 - 2008 period before it dropped in 2009.              In 2008, Indonesia-United States two way trade totaled US$20.9 billion which in 2009 dropped to US$17.9 billion. The total trade value of both nations in the January - August 2010 period stood at US$15.6 billion, which were higher than that in the same period in 2009 which stood at US$11.3 billion.              Indonesia has always enjoyed a surplus in its trade with the United States since 2005. The surplus of trade between Indonesia and the United States in 2009 was recorded at US$3.7 billion and in the January - August 2010 period it stood at US$2.8 billion.      (T.A014/A/HAJM/00:30/A014) 11-11-2010 00:29