New export markets too small

Kamis, 13 Desember 2012 | 09:22

Despite significant growth, exports to new markets are still unable to offset demand for Indonesia’s goods and commodities from the country’s existing major trading partners.From January to October this year, non-oil and gas exports to 10 non-traditional and emerging markets, such as South Africa and Colombia, expanded by 115 percent on average to US$3.7 billion, according to statistics from the Trade Ministry. This compared to a 6.2 percent in exports growth, to $86.6 billion, to 10 key export markets.

Indonesia saw its largest export growth of 337.62 percent to $58.58 million to Libya during the period, followed by a 264.50 percent growth to $57.76 million to Mauritania, and a 200.16 percent growth to $82.12 million to Ivory Coast.

Exports mainly comprised coal, books and printed materials, pharmaceutical products, paper, rubber, palm oil, soap, automobiles and parts, and processed meat and fish.

Ahmad Erani Yustika, an economist at the Indonesian Institute for the Development of Economics and Finance (INDEF), said on Tuesday that although exports to several new markets had increased by more than 100 percent, the result was not significant enough to counter weakening sales to traditional markets because in terms of volume as well as value, they were still very small.

“The government’s claims of a successful export diversification push are too early. Expansion to non-traditional markets goes beyond changing destinations and it takes a lot of time, as exporters should fit their products with the needs of consumers in new markets,” he told The Jakarta Post.

“We must be consistent in executing our measures to push up exports to new markets and for this goal, we need a road map,” he added.

Deputy Trade Minister Bayu Krisnamurthi earlier said that the government had already considered designing a road map for export diversification, but it was not clear whether the plan has progressed.

In previous years, the government has tried to shift its focus from major trade partners, such as Japan and the US, to new markets, particularly in the Middle East, South America and Africa. Those efforts increased last year as exports to traditional markets slumped.

Indonesian Institute of Sciences (LIPI) economist Latif Adam echoed Erani’s argument, saying that one of the main indicators of successful diversification would be a noticeable absorption of exports in new markets that had previously sold well in existing markets.

“The $3.76 billion figure is not comparable to $86.6 billion. Real success will happen only if non-traditional markets can replace the role of traditional markets in terms of volume or value,” he said.

The government should be more proactive in disseminating information about export-related regulations, non-tariff barriers and consumer interests in new markets, he added.

Exports plunged by 7.61 percent to $15.67 billion in October from a year earlier, worse than market expectations of only 4 percent, particularly due to a drop in palm oil prices, while imports grew steadily by 10.82 percent to $17.21 billion from the past year, resulting in a record monthly deficit of $1.55 billion.

Cumulatively from January to October, exports dropped by 6.22 percent to $158.66 billion from the past year, while imports surged by 9.35 percent to $159.18 billion, generating a deficit of $516.1 million. (Linda Yulisman/ The Jakarta Post)

by Edy Can