Jakarta, March 7 (Antara)- As the country experienced a trade deficit
of US$657.2 million last September, after a trade surplus of US$132.4
million the previous month, the government introduced a number of
policies to overcome the problem last year.
Now it is preparing a third package of economic measures to face this year's economic challenges.
It has twice, since August last year, introduced a package of economic
policies, which proved to be effective in lowering the country's current
account deficit to 3.2 percent of the national gross domestic product
(GDP) in late 2013, from 4.4 percent in the second quarter of 2013.
According
to the Central Bureau of Statistics (BPS), Indonesia reported a large
trade surplus of US$776.8 million in November, which was significantly
higher than the revised US$24.3 million surplus of the previous month.
The
trade surplus widened again to US$1.5 billion in December, as imports
fell and exports of manufactured goods gathered momentum, according to
the BPS.
Referring to this achievement, the Indonesian Finance Minister Chatib
Basri told a press conference at the Indonesian Embassy in Australia
last month that Indonesia's economy has emerged out of a difficult time
caused by domestic factors and global economic fluctuations, after a
number of policies were passed to tackle the problems.
"The
current account deficit and the inflation rate have declined, while the
rupiah exchange rate is on a rising trend; also the economic growth
remains high," he noted in a press statement at the Indonesian Embassy
in Australia.
Apart from this, the minister emphasized that in the long term,
Indonesia must make serious efforts to improve its human resources,
infrastructure and state institutions to transform itself from a
middle-income to an advanced country.
However, Agus Martowardojo, the governor of the central bank Bank
Indonesia (BI), said in Medan, North Sumatra, last week Indonesia is
estimated to have recorded a trade deficit in January 2014, after a
surplus for the third consecutive month in December 2013.
This trade deficit needs attention as it comes after Indonesia enjoyed three consecutive months of surplus.
"We must realize that the balance of trade may come under pressure
mostly due to seasonal factors," he said on Friday, March 1.
The trade deficit was caused by the country's declining export
performance, following low demand for crude palm oil (CPO) and coal in
the global market and the implementation of a law banning the export of
unprocessed minerals, he said.
"CPO
and coal exports at the start of this year were not as high as
expected. Moreover, the ban on the export of unprocessed minerals has
caused many institutions to wait for better conditions. This may put
pressure on our exports," he noted
The Indonesian government had
previously said it will implement Law No.4/2009 on Mineral and Coal
Mining, which will ban the export of raw minerals beginning January 12,
2014.
Under the law, mining companies are required to process minerals inside the country before exporting them.
"Based
on the law, we are no longer allowed to export (raw minerals) as of
January 12, 2014. We should consistently abide by it," Minister Hatta
Rajasa said recently.
Data
at the ministry of energy and mineral resources for the January-October
2013 period indicates that Indonesia exported 465 million tons of
nickel ore, 16.11 million tons of iron ore and sand, 47.01 million tons
of bauxite and 1.02 million tons of copper concentrate.
The minister acknowledged that the ban of raw mineral exports will
temporarily reduce state revenue by about US$4 billion and had the
potential to increase the country's trade deficit.
Indonesia's processed mineral exports stand at US$4.9 billion. The new
law will lead to a decline in unprocessed mineral exports in 2014, which
could lead to a decline in overall exports. The decline in unprocessed
mineral exports could also affect the country's trade balance.
However,
the deficit is not expected to grow too large because the government
has been trying to reduce its oil and gas imports, particularly after it
issued a policy on the use of bio-diesel to offset diesel oil
consumption.
"We
can still have its positive aspects because we can reform our industry
at home. After processing by using smelters, we can earn US$5 billion in
exports," Minister Hatta said.
The
country's exports were previously predicted to decrease, with the
consequence of suffering from a trade deficit in January. Yet this is
only temporary.
Therefore,
the Indonesian government is planning to introduce a third package of
economic measures to improve the performance of the country's current
account.
"We are preparing a third package of measures. Hopefully, it can be
completed in the first quarter," Minister Hatta Rajasa said here on
Wednesday.
The
third package of measures is designed in such a way that it will induce
foreign investors to reinvest their profits in the country instead of
taking it back to their homes, he said.
"If the profit is reinvested in Indonesia, it will reduce (the current account) deficit," he said.
BI Governor Agus Martowardojo said in 2014, exports are expected to
improve and become one of the engines of economic growth besides
domestic consumption.
"If commodity prices remain unchanged and even fall slightly, they will
likely improve in 2015. But with the slow but steady pace of economic
recovery in developed countries, we hope our exports will increase," he
said.
The government in late August 2013 introduced the first package of
economic measures to protect the domestic economy from the impact of the
global economic slowdown. It was aimed to curb the widening current
account deficit, stabilize the rupiah's exchange rate, maintain high
economic growth, improve people's purchasing power and keep the
inflation rate in check.
Later in December 2013, the government introduced a second package of
economic policies to reduce the import of consumer goods and encourage
exports.
The two package of measures have proven effective in lowering the
country's current account deficit to 3.2 percent of the national gross
domestic product (GDP) in late 2013, from 4.4 percent in the second
quarter of 2013.
Therefore, the government's plan to introduce a third package of
economic policies is expected to help overcome problems in the
economy in the current year of politics, when the government will also
organize a legislative election on April 9 and a presidential election
on July 9, 2014.***2***
(T.014/INE/H-YH)
EDITED BY INE
(T.A014/A/BESSR/A/Yosep) 07-03-2014 22:59 |
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