Buyers unwilling to place long-term orders: Official

JAKARTA (JP): Buyers of Indonesian goods have been unwilling to place long-term orders here due to uncertainty over the country's political situation, a senior official has said.

Director General of International Trade Djoko Moeljono said on Thursday that very few large orders had been placed by foreign buyers for the period after June.

"Buyers are currently waiting to see what happens in the election before placing any further orders. In recent weeks they have only placed short-term orders, and then for only small amounts," he said after opening a discussion organized by the Indonesian Exporters Association (GPEI).

Djoko said that in past years foreign buyers placed purchase orders to cover periods of at least one year, adding that most were now unwilling to stretch themselves beyond three months.

"It is burdensome for us because many of our manufacturers have bought supplies and raw materials to cover a full year's production," he said.

Indonesia will hold its first free and fair general election since 1955 on June 7, but people fear that rivalry among the 48 contesting political parties could provoke further unrest in the country.

Djoko said many foreign buyers have expressed concern over the political situation here and warned they will turn to more stable countries if Indonesia descends into chaos after the election.

"We hope the election runs smoothly so that the situation here improves and foreign buyers renew their purchase agreements with local manufacturers," he said.

Djoko said that Indonesia's non-oil and gas exports for the first three months of this year dropped by 19.3 percent to US$8.2 billion from the same period in 1998.

Monthly non-oil and gas exports totaled $2.3 billion in January, $2.6 billion in February and $3.3 billion in March.

"Although our exports have increased in value in recent months, they are still 19.3 percent below their level in the first quarter of 1998," he said.

Djoko said the country's exporters would have to work hard to push exports towards the $50 billion targeted this year.

"Reaching the target will very much depend on foreign buyers' confidence," he added.

Djoko said non-oil and gas exports declined by 2 percent to US$40.97 billion in 1998 from $41.82 billion in 1997.

Exports of oil and gas stood at $7.8 billion last year, bringing the country's foreign exchange earnings from exports to $48.8 billion.

Last year's fall in non-oil and gas exports was attributed to falling imports of raw materials and capital goods as a result of the declining value of the rupiah in the international currency markets.

Imports of raw materials and capital goods fell by 34 percent last year, forcing manufacturers to cut production and exports despite high demand.

Over 90 percent of the country's non-oil and gas exports were shipped to only 24 countries, he said.

Exports to Japan and South Korea, both key trading partners, fell by 23 percent and 17.5 percent respectively last year, he said.

"We have to try hard to enter new markets to boost our exports because we do not want to depend too heavily on our established trading partners," he added.

Meanwhile, GPEI chairman Amirudin Saud said he hoped the country's exports would reach $56 billion this year, adding that imports of $30 billion had been forecast for the same period. (gis)