Businesspeople unperturbed by China's moves
Tony Hotland, Jakarta
Despite the government's concerns, some domestic industry players remain calm over China's decision to slow down its economy, saying the move would have a negligible -- if any -- impact on their exports.
State-owned firm PT Krakatau Steel -- the country's largest steel maker -- said that China's move would effect its sales, as it has been shifting attention to other markets.
"Last year, China was one of our main markets, but the market was not competitive in the last few months. We're now focusing on the United States, Europe, and Japan," company marketing director Kemal Masduki told The Jakarta Post over the weekend.
"Besides, we've always relied on the domestic market as some 80 percent of our products are sold here. We have a good automotive industry," Kemal added.
He said those markets offered prices of up to US$20 to $30 higher than China's. Steel produced by Krakatau is sold at $550 to $600 per kilogram on the international market.
Last year, Indonesia's steel exports to China rose by a whopping 135 percent to US$114.07 million, from $48.29 million, according to the Indonesian trade attache in China.
According to Kemal, Krakatau Steel exported over 30 tons of steel per month to the world's most populous nation last year.
Kemal's view is shared by executive director of the Indonesian Rubber Producers Association (Gapkindo) Suharto Honggokusumo.
"China isn't our traditional market since it largely imports rubber for its huge automotive industry -- to make tires -- from Thailand and Malaysia. So, I don't think it (China's move) will have a huge impact on us," he said.
Last year, Indonesia's rubber exports to China were around 100,000 tons, well below Thailand's 600,000 tons and Malaysia's 250,000 tons.
Indonesia's traditional markets for rubber are the U.S. and Japan.
China has taken a string of measures to slow down its economy -- which has been growing by more than 9 percent over the past few years -- to prevent it from overheating and making a hard landing. It has ordered no approvals for new steel, aluminum, and cement projects, and reviewed nationwide property projects, such as commercial offices, golf courses and shopping malls.
The move has caused worries among Asian countries, which have increasingly become dependent on China. Minister of Finance Boediono also expressed concerns, saying it could impact on the country's exports.
China is Indonesia's fourth largest export destination after the U.S., European Union, and Japan. According to the office of the Directorate General of Customs and Excise, Indonesia's exports to China reached $3.85 billion last year, while the Indonesian embassy in China put the figures at $5.75 billion.
Chairman of the Indonesian Palm Oil Producers Association (Gapki) Derom Bangun also said that China's move would not have any adverse impact on Indonesia's crude palm oil (CPO) exports.
"Most of our products are for consumption purposes; only a little are for industries. We project bigger exports of palm oil to China this year," Derom said.
China is Indonesia's second largest importer of CPO after India. In 2003, total CPO exports to China were about 500,000 tons, while up to 700,000 tons are projected to be exported this year.
Exports to China by commodities in first quarter of 2004
Commodity Value (US$)
Pulp and paper 102.89 million Chemical organics 94.19 million Vegetable oil 65.66 million Electric machinery 48.88 million Wood and cork 28.43 million Raw and synthetic rubber 25.38 million Non-iron metal 15.15 million Textile fibers 8.99 million Fish, shellfish 3.19 million Shoes and footwear 0.96 million
Source: The Ministry of Industry and Trade