Countertrade to tackle emerging trade barriers

Countertrade to tackle emerging trade barriers

JAKARTA (JP): Countertrade could help tackle various emerging
international trade barriers, President Soeharto said here
yesterday.

When opening an Asia Pacific Countertrade Association
conference, Soeharto said countertrade could help solve various
economic challenges, such as fierce competition and capital
limitation.

"Indonesia has experience in countertrade, both through
government-to-government and inter-private sector agreements,"
Soeharto said at the opening ceremony.

Indonesia initiated a countertrade policy in the mid-1980s to
tackle the draining of foreign exchange reserves following the
sharp drop in oil prices.

Indonesia's non-oil exports from countertrade agreements
surged to US$1.2 billion in 1995 from a mere $140 million in
1982. But it was still small compared to overall non-oil exports
of $34.95 billion in 1995.

Nevertheless, Soeharto said, the countertrade system could
bring enormous benefits. It created new markets and ensured
financial support for raw materials and capital goods purchases.

The system could also facilitate the transfer of technology
and attract new investment, the President said.

Indonesia has used a countertrade or offset policy with its
trading partners in selling or purchasing high-tech products.

Last year, Indonesia counter-traded domestically built
aircraft for Thai glutinous rice.

And last month, the government offered some 40 commodities,
ranging from rubber to cosmetics, to Russia in exchange for
Sukhoi jet fighters and helicopters.

The association's president Ch. Kamm said countertrade was
becoming a prominent tool to address bilateral trade imbalances
between countries.

"As such, it positively contributes to cross-border
investment, joint ventures, cooperation, alliances, technology
transfers and creative unconventional finance structures," Kamm
said.

The conference's chairman, Hashim Djojohadikusumo, reported
that 175 participants from 24 countries, including Iran, Germany,
Croatia, Ukraine, the Czech Republic, the United States,
Australia and Finland, participated at the conference. (prb/rid)