Indonesia’s trade had a huge boost in January this year as it soared to a US$1.4 billion surplus, way up from US$10 million in January 2016. Also encouraging was the increase in the non-oil and gas exports, up 29.2 percent Y0Y to US$9.4 billion, while imports in the non-oil and gas sector also rose to 14.5 percent at just under USD12 billion.
This suggests that Indonesian businesses have finally shrugged off their late response to the China-ASEAN Free Trade Agreement, which when instigated in 2010 initially saw Indonesian-made products swamped by cheaper and faster turn-around from Chinese competitors, and traditional Indonesian exports markets elsewhere in ASEAN also challenged by Chinese exporters.
“Indonesians have stood up to the China challenge and have shown they can compete” says Chris Devonshire-Ellis of Dezan Shira & Associates “After the initial shock of competing with China in free trade they are now competitive and indeed taking some manufacturing investment away, and especially so from South China. Improving infrastructure, lower operating costs and a closing of the productivity gap means Indonesia is rapidly becoming an ASEAN export tiger with healthy domestic consumption hand in hand with that. It’s a very healthy mix for foreign investors.”
The Indonesian government has also started to develop its strategy to boost exports in 2018 to support its ambitious target for economic growth of 6.1 percent for that year. “The target is far from this year’s (2017) goal of 5.1 percent, so we need to revise our trade strategy for next year,” Trade Ministry secretary general Karyanto Suprih said at a media briefing in Jakarta on Friday.
The blueprint for Indonesia achieving its 2018 export targets and the inclusion of incentives to do so will be released by the Government in May, and will be discussed on Indonesia Briefing at that time.
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