East Java exports reach the highest rate ever

East Java exports reach the highest rate ever

SURABAYA: During January to September this year, East Java's
export rate increased 38.85 percent. The total volume of exports
reached more than 300 million tons worth US$3.8 billion.
According to Kresnayana Yahya, a statistician, it is the best
rate ever. The monetary crisis and the depreciation of the rupiah
could be the main reasons for the success story.

But there are other factors too. "Industry in East Java is
consistent with products that are in demand. Despite the crisis,
it has succeeded in maintaining the continuity of production,"
explained Agus Hariadi, head of the foreign trade section at the
East Java Department of Industry and Trade.

It is not an easy job for exporters, because to maintain
continuity of production they must have access to raw materials.
The problem is, a lot of raw materials needed for industry in
East Java are imported from other regions/provinces, as well as
from other countries. As Hariadi explained, East Java's export
products are resource based; topping the list are marine and
agricultural products.

"Actually, our strength is that we have a rich variety of
export products. There are more than 1,500 kinds of export
products from East Java," said Hariadi. These products are
exported to some traditional markets like Japan, Singapore and
the U.S. "But recently we have been developing new markets. Now
there are more than 140 other countries to which we export,"
added Hariadi proudly.

The main export products are paper, household wares, wood,
marine products, copper, footwear, chemicals, plastics, tobacco,
coffee, tea and spices. East Java is also different from other
provinces in Indonesia, some of which are richer in natural
resources, because the province's products have added value. For
instance, East Java exports finished products such as furniture
rather than logs or rattan. It also exports fashioned jewelry
rather than pure gold.

Export obstacles

But exporting does not just entail selling to foreign
countries. It includes importing raw materials, producing,
delivery, transportation, banking, insurance, etc. Rudy
Wicaksono, chief of the foreign trade section at the East Java
Chamber of Commerce (Kadin), is concerned that export activities
are dominated by foreign investors. "Our small industrial
entrepreneurs are still being left behind," he said.

To reduce the gap, East Java Kadin initiated an e-commerce
campaign. "We want to educate small entrepreneurs in the regions
about electronic trading." But such a program needs support,
especially from local governments. "Without any attention from
the government, it won't work," said Rudi.

In Rudi's opinion, there should be less exhibitions and trips
abroad by government officials. They are costly and there is no
guarantee of effectiveness. The budget from the annual regional
budget (APBD) that normally goes to this kind of activity should
be directed at the education and training of small entrepreneurs
to enter the global and open markets.

Another obstacle that should be considered is the fact that
East Java's export products rely on natural resources. "In the
long term, the prospect is not good, especially if we are too
dependent on raw materials from other regions or other
countries," said Kresnayana.

To make furniture for export, East Java imports wood and logs
from Central Java and Kalimantan, and to export paper products,
some raw materials are imported from other countries. According
to Kresnayana, East Java should follow other provinces, like West
Java and Jakarta, in exporting knowledge and technology-based
products.

Rudi Wicaksono agrees. "These kinds of products can compete in
the global and open markets in the 21st century. It is important
for everybody to know that transfer of knowledge and technology
is as important as collecting money (devisa) and creating job
vacancies."

But the most difficult problem to handle is transportation.
According to Kresnayana, 97 percent of ships are owned by foreign
companies. He is not surprised that there are not many people
interested in investing in transportation. "There were too many
regulations, paper work and fees in the New Order era. It was
simpler to just rent foreign ships to deliver our export
products."

Prospects

However, there are still good prospects for some traditional
export products and some new products. Among the newly developed
products are wooden household wares. "There is a significant
increase in exports of wooden household wares," Kresnayana said.
This is interesting because the raw materials for these wares
have very little value. Wood scraps, coconut trunks and coconut
husks. With a creative design, products made from these raw
materials now sell well.

"It proves that design matters. Our gold also sells well as
designed products," added Kresnayana.

The role of trade sections in Indonesian embassies have been
questioned, not only by Kadin, but also by Kresnayana, who is
also a member of the Indonesian Managers Association.

"For all those years, trade sections have not functioned as
expected. Most foreign trade is done directly by the
traders/exporters, without the involvement or the help of the
trade section," said Kresnayana. Rudi Wicaksono suggested that
trade section in embassies be abolished. "Or they should be a
combined team of government officials and experienced exporters.
They (the exporters) are the ones who know where to sell the
products, how to create new markets, and to innovate new export
products," said Rudi. (Sirikit Syah)