Tue, 30 Oct 2007
The country is set to enter the "next stage" of its export recovery, 10 years after the 1997 Asian financial crisis, Trade Minister Mari Pangestu said.

In an interview with Agence France-Presse last week as a major trade fair was launched aiming to lure cashed-up buyers from abroad, Pangestu said the government is now focusing on seeking to boost non-commodity exports.

"My first priority (has) been to get us back to the level before the crisis and I think we've achieved that in terms of market share, in terms of the growth rate," she said.

"The next stage: ... we have to ensure manufacturing exports will continue to increase. If you look at the numbers, actually the growth rate in the manufacturing sector in general hasn't been high," she said, referring to an annual growth rate of 5% to 10% in recent years.

Pangestu said strong demand for Indonesian commodities had driven its exports past the milestone of $100 billion a year. However, growth has been far slacker in non-commodity exports.

The result has been impressive growth in industries that employ few people, but far less in those with the potential to provide jobs to the growing population of unemployed.

"We haven't seen the growth that we would have liked in the labor-intensive industries," Pangestu said, conceding that this was crucial to reducing poverty in the country.

While there were some exceptions to the country’s lackluster export performance -- such as in consumer electronics -- exports such as textiles and footwear "haven't really grown as much as we would have liked".

Pangestu said Indonesia would try to improve the position of its manufacturing sector by attracting investment and pursuing labor reform. She said the country had already been successful in its investment push but would not revise its labor laws "in the near future".

The minister said Indonesia would nevertheless attempt to tackle investor fears of high labor costs by introducing a system of retrenchment insurance for employers. "The main issue companies complain about is the high cost of retrenchment compared to other countries," she said.

Figures from the Trade Department show total exports, including oil and gas, reached $73.35 billion between January and August this year, a 13.35% jump on the same period a year ago.

Growth in non-oil and gas exports increased by 19% to $59.91 billion from the same period in 2006.

Pangestu said Indonesia would aim for overall export growth of between 11% and 13% over the next two to three years.



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