Indonesia's trade surplus surged to $4.06 billion in December from $2.27 billion the previous month on strong exports, but inflation jumped in January to its highest level for two years, the Central Statistics Agency said Friday (1/2/08).
Exports rose to a record $10.86 billion from $9.81 billion in November, mainly due to a $975.3 million increase in the value of crude palm oil exports, Dow Jones Newswires reported.
The value of CPO and other vegetable oil exports more than doubled to $1.69 billion in December from $719 million in the previous month. Meanwhile, imports slid to $6.80 billion from $7.54 billion in November.
The data showed that Indonesia booked a $9.69 billion deficit in oil trade in 2007, widening from $5.90 billion in 2007 due to rising oil prices globally.
For overall trade, Indonesia booked a $39.6 billion trade surplus in 2007, slightly lower than $39.7 billion in 2006. Total exports rose 11% on year in 2007 to $113.99 billion. Imports gained at a faster pace of 22% on year to $74.40 billion due to a 15% on-year increase in oil imports. Non-oil and gas exports rose 15.5% to $91.94 billion in 2007.
The European Union was Indonesia's biggest trading partner, removing Japan from the top spot, with non-oil and gas exports during 2007 reaching $13.3 billion against $12.03 billion a year before, Thomson Financial reported.
Japan came in second, with non-oil and gas exports of $13.10 billion against $12.2 billion in 2006. The US was third, with non-oil and gas exports amounting to $11.33 billion against $10.68 billion in 2006.
The inflation rate increased significantly in January, coming in at 7.36% against a year ago partly on higher food prices, BPS said. Inflation was 6.6% year-on-year in December.
The consumer price index rose 1.77% in January compared with December, at the upper end of expectations, Agence France-Presse reported. January's on-month CPI rise was the highest in any month since October 2005.
Ali Rosidi, deputy chairman of BPS, told a press briefing that food prices rose 2.8% from December and prices of processed food, beverage, and tobacco gained 2.0%. Housing, electricity, water, gas and fuel prices increased 1.8%, while clothing was up 2.3%.
The sharp spike in the CPI supported comments from some analysts who said Bank Indonesia may need to tighten policy this year to prevent excessive inflation, Dow Jones reported.
The analysts said the central bank is likely to maintain interest rates at current levels, at least for now, even though rates are trending downward globally.
The government on Friday unveiled new measures aimed at containing prices of food staples, targeting palm oil-based cooking oil, wheat flour, rice and soybeans, Reuters reported.
"Rising oil prices and certain commodities have had an impact on local prices which affect people in low-income brackets," President Susilo Bambang Yudhoyono told reporters at the presidential palace, before the measures were unveiled by the chief economics minister, Boediono. "The measures aim to stabilize local prices," the president added.
A rally in global commodity prices has helped push wheat, palm oil and soybean prices to all-time highs, hurting many in a country where millions of people live on less than $2 a day.
Boediono said that the government would apply a maximum palm oil export tax at 15%, against a maximum of 10% currently, if crude palm oil trading on the global market tops $1,100 a ton.
"We will continue progressive export taxes on palm oil, including raising the palm oil export tax," he said.
The government would also keep in place a program under which local palm oil-based cooking oil prices are subsidized by scrapping a 10% value-added tax imposed on cooking oil sold by refiners to distributors.
On soybean prices, aside from scrapping a 10% import duty, the government would also subsidize local soybean prices by Rp1,000 ($0.11) per kilogram for six months.
Boediono said a 5% import duty on wheat flour would be scrapped, as well as a 10% value-added tax on wheat processed by domestic flour millers.
The government would also increase the allocation of subsidized rice for poor families to 15 kg per family per month from 10 kg, Boediono said. The government has allocated Rp3.6 trillion for food subsidies this year.
Jakarta share prices closed 0.7% higher Friday led by mining and plantation issues, though gains were capped by the fall in interest-sensitive stocks after inflation rose far higher than expected in January, Agence France-Presse reported. The Jakarta composite index closed up 19.57 points at 2,646.82.
The rupiah strengthened to 9,200/9,210 to the US dollar, compared to 9,245/9,255 late Thursday.