Rising demand and prices for primary commodities have led the Ministry of Trade to raise its 2009 export projections from a 30 percent contraction to a 15 percent year-on-year decline.
Trade Minister Mari Pangestu on Monday said that the recent rise in commodity prices and the impact of economic stimulus packages in major economies, including China, indicated that overseas export markets would be stronger than previously expected.
â€śPrices of commodities such as crude palm oil, rubber and coffee have rebounded in the second quarter, after plunging due to the economic crisis, which caused a significant drop in demand in some of the countryâ€™s major foreign markets,â€ť she said.
Palm oil for October delivery rose 5.1 percent to 2,123 ringgit ($603) on the Malaysia Derivatives Exchange last week.
The price of rubber has also been rising in recent weeks. Natural rubber rose to 180 yen ($1.89) per kilogram on Friday in Tokyo, after trading at 153 yen on July 13.
Mari said the Chinese governmentâ€™s stimulus package helped support Chinese demand for major Indonesian export commodities such as crude palm oil, iron sand and construction materials.
If demand and prices continue to rise, she said, total exports could grow as much as 5 percent next year.
The Trade Ministry continues to encourage companies to seek new export markets while waiting for demand in traditional markets to fully recover.
Exporters have been encouraged to expand into relatively untapped markets in the Middle East, Russia, South America and Eastern Europe.
Though export volumes to these new markets were unlikely to reach those of the countryâ€™s biggest markets, such as the United States and Japan, they could help to fuel growth, Mari said.
The government had earlier projected that non-oil and gas exports to the Middle East, Russia, Eastern Europe and South America would reach $50 billion this year, up from $39.8 billion in 2008.
If that target is achieved, these exports would account for about half of the countryâ€™s total annual non-oil and gas exports, up from 36.9 percent last year.
Figures from the Central Statistics Agency (BPS) show that the value of non-oil and gas exports to primary markets fell by 22.5 percent, to $21.79 billion, from January through May, compared with the same period in 2008.
During that same period, nonoil and gas exports to secondary markets fell only 18.7 percent, to $13.27 billion, from a year earlier.