Businesspeople unperturbed by China's moves

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