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)