Wed, 25 Mar 2009
From: The Jakarta Globe
By Teguh Prasetyo & Arti Ekawati
The European Union is still an important market for Indonesian non-oil and gas commodities, despite shrinking demand and tougher requirements on quality and standards, an official at the Trade Ministry said.

“The European Union is still Indonesia’s biggest export destination for non-oil and gas commodities, such as fisheries products, crude palm oil, textiles, footwear and food and beverages, although we are facing greater challenges to increase our product quality to comply with their standards,” Bachrul Choiri, the chairman of the National Agency for Export Development, said on Tuesday.

Bachrul said the Ministry of Trade was still optimistic Indonesian products could remain competitive in Europe because of domestic manufacturers’ serious efforts to meet the EU’s stricter product quality requirements.

He said this commitment was shown by domestic manufacturers’ and the government’s efforts to promote Indonesia’s commodities to the European Union through information exchanges on market potentials, exhibitions and lobbying-based government-to-government and business-to-business relations.

Data from the Ministry of Trade showed that from January to November 2008, Indonesia’s non-oil and gas exports to the European Union accounted for 14 percent of Indonesia’s total non-oil and gas exports, followed by Japan with 12.9 percent and the United States with 11.6 percent.

This year, the value of the country’s exports are expected to slump to between 20 percent and 30 percent of the previous year’s total, with most of this downturn attributed to the United States, Japan and Europe, where recessions are more severe than in China, another key buyer of Indonesian products.

However, Bachrul stressed that despite the expected downturn, exporters could keep sending their products to Europe as long as they heeded the EU’s stricter requirements on imported products.

Saut Hutagalung, the director of foreign trade at the Ministry of Maritime Affairs and Fisheries, said fish exports this year were still on track to reach “something close” to last year’s figure of $219 million, mostly from frozen shrimp and tuna.

“For higher quality products, the ministry has been urging fish exporters to obtain licenses so their products can meet tighter European Union food safety standards,” he said.

So far, around 136 out of 400 fish exporters in Indonesia have obtained licenses to ship their products to the EU, which is the third-largest market for fishery products after Japan and the United States.

The Indonesian Palm Oil Association is also acutely aware of the need to ensure export products meet specifications.

Derom Bangun, vice chairman of the association, said that CPO producers saw greater chal lenges to EU exports, ever since its member countries linked biofuels made from palm oil to environmental issues.

He said the EU would soon issue carbon footprint and conservation requirements for companies exporting crude palm oil to EU member nations.

Regarding textiles, the Ministry of Trade’s directorate of chemicals noted that textile producers who use chemicals must comply with a regulation called the Registration, Evaluation, Authorization and Restriction of Chemicals, or Reach.

The regulation is intended to protect people and the environment by requiring information on products’ chemical components, including their potential health hazards and side-effects. This data must be reported to the European Chemical Agency.

The World Trade Organization has been notified that all countries exporting to the EU must comply with this rule.

“Products that have not been cleared will banned,” said Partogi Panggaribuan, the directorate’s head.




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