Exports expected to increase 16% yearly after GATT

JAKARTA (JP): The annual growth rate of Indonesia's exports are projected to increase by 16 percent after the implementation of the new General Agreement on Tariffs and Trade (GATT) next year, Minister of Trade Satrio B. Joedono says.

Speaking at a hearing with Commission VII of the House of Representatives yesterday, Joedono said the country's current annual export growth stands at 13.8 percent, much higher than the world's average growth of 5.6 percent.

He noted that the growth increase will result from the low import tariffs to be implemented by developed countries in accordance with GATT's principles which stipulate import tariffs be cut by 33.3 percent.

He illustrated that Japan's current average import tariff of 6.3 percent will be lowered to 3.9 percent, while its tariff for industrial products will be cut to 3.6 percent from the current 6.9 percent.

The United States will also cut its import tariff to an average of 6.5 percent from the current of 8.8 percent, Joedono said.

Japan and the United States are the major destinations of Indonesia's exports.

Joedono added that Indonesia's textile and textile related products, which account for 14 percent of the country's total exports, will be able to enter the United States more freely after its quota system is abolished as mandated by GATT.

According to GATT, the Multi-Fiber Arrangement which allows textile importers to impose quotas through bilateral negotiations, will be gradually abolished over 10 years.

"Exports of textiles and garments will enjoy the most rapid growth rate after GATT is implemented. Exports of textiles will grow by 34 percent annually and garments by 60 percent," the minister said, referring to the results of a study conducted by the GATT secretariat.

Exports

Joedono yesterday also announced that Indonesia's exports during the April-August period of this year increased by 17 percent to $13 billion over the same period of last year.

"If our exports can be maintained at $2.6 billion per month, we will reach $31.2 billion this fiscal year, 16 percent higher than last year," Joedono said.

Commenting on Indonesia's readiness to enter the GATT era, Joedono said Indonesia has long been liberalizing trade by lowering import tariffs and reducing non-tariff barriers since 1983.

"The motivation behind the cutting of import tariffs is actually to nourish non-oil exports," Joedono told the commission, which deals with trade, finance and cooperatives.

The minister said Indonesia's current import tariffs average at 11 percent, far lower than the 40 percent required by GATT.

He explained that only 60 items -- out of 8,877 kinds of traded goods -- are subjected to import duties of over 40 percent, and one fourth of the country's total imports are already duty free.

When asked about the benefits Indonesia can reap from the liberalization scheme of the Asia Pacific Economic Cooperation (APEC) forum, Joedono explained that Indonesia will be able to direct more of its exports to other APEC members. Presently 70 percent of its total exports go to APEC countries.

"Indonesia will not only become the market of products from developed members but will also inundate them with its products," Joedono said, adding that trade between Indonesia and APEC's developed members is more complementary.

In their second informal summit in Bogor, south of here, last week, APEC leaders agreed on the liberalization of trade and investment in the region by 2010 for developed members and 2020 for developing members. (rid)