China seeks to export more products to RI

Rendi A. Witular, The Jakarta Post, Jakarta

China, in a bid to narrow its trade deficit with Indonesia, plans to export more of its products here, a move that could threaten local manufacturers.

A senior trade official at the Chinese Embassy in Jakarta, Tan Weiwen, said the country's export volume to Indonesia was expected to increase to about US$3.1 billion this year from $2.8 billion last year.

"We are optimistic that we can increase our exports since our products have long been accepted by the Indonesian market, due to their low prices and fairly good quality," Tan told The Jakarta Post last week.

He said China hoped to export more of its chemical products and machinery to Indonesia, which have very competitive prices.

"This (increase in) exports should narrow our trade deficit (with Indonesia)," he said.

The Chinese official said that over the past 10 years, China had suffered trade deficits with Indonesia.

According to data published by the People's Republic of China's Ministry of Trade and Economic Cooperation, Indonesia's exports to China in 2001 totaled $3.88 billion, while its imports from the country totaled $2.83 billion.

Tan said China expected to be able to balance the trade figure with Indonesia within the next three years.

Indonesia's Central Bureau of Statistics (BPS) ranks China as Indonesia's sixth largest trading partner.

Chinese-made products popular among Indonesians include electronic goods, household appliances, textiles, footwear and motorcycles.

The head of the import division at BPS, Irlan Indrocahyo, predicted that Chinese imports to Indonesia would increase, because that country's products were affordable and popular among middle to low-income families here whose purchasing power has been weakened by the ongoing economic difficulties.

"Chinese-made products are for the most part purchased by low and middle-income people. This group tends to seek less expensive products instead of quality products," said Irlan.

A flood of inexpensive Chinese-made products here has raised suspicions that China has been dumping its products on the Indonesian market.

But Tan quickly dismissed such suggestions, saying Chinese manufacturers were able to sell their products at competitive prices because of lower production costs, resulting from low labor costs and management fees, low taxes and the availability of raw materials in its domestic market.

"Production costs in China are very low. Not just labor, the salary of the management is also very low. As an example, a chief executive officer in Indonesia earns about $5,000 (per month), but in China they are very lucky just to earn $1,000," Tan said.

He added that most companies in China still used a payment system that was based on productivity, meaning workers were paid according to how many products they made in a day.

Anton Supit, an executive at the newly established Crisis Center and also the chairman of the Indonesian Footwear Association, said cheap Chinese products were a threat to Indonesia's manufacturing industry.

"Although the products enter the country legally, their prices are very low," he said, adding that if the products were smuggled in the prices would be even lower.

Local manufacturers have complained that the rampant smuggling of products into the domestic market is seriously damaging their businesses.