Exports, imports down in May, statistics buseau says

Dadan Wijaksana, The Jakarta Post, Jakarta

After showing signs of recovery in previous months, Indonesia's exports were down again in May, the Central Bureau of Statistics (BPS) announced on Monday.

BPS said exports for the month declined slightly by 1.5 percent to US$4.7 billion from $4.77 billion in April. This was a hefty 3 percent drop from the $4.85 billion in May last year.

The slowdown in exports may have been caused by the strengthening of the rupiah against the US dollar, which analysts say makes the country's products less competitive than products from other countries in the region, particularly China, which has a fixed exchange rate.

The two countries are competing for export markets in a number of labor-intensive manufacturing industries, including textiles and footwear.

Since the beginning of the year, the rupiah has been one of the best performing currencies in the region, appreciating by about 20 percent.

The country's exports were negatively affected by the global economic slowdown, although they recently picked up thanks to signs of a recovery in global demand.

BPS also announced that imports in May were weak, falling by 15.8 percent to $2.39 billion from $2.84 billion in the same period last year, and down by 1.6 percent from $2.43 billion in April.

The lower import figures may be a reflection of a slowdown in both foreign direct investment and domestic investment, as a result of a deteriorating investment climate here.

Indonesia's production system is heavily dependent on imported raw materials.

The Investment Coordinating Board (BKPM) said last week foreign direct investment approvals in the first five months of the year fell by 59 percent to $1.67 billion, while domestic investment approvals were down 30 percent to Rp 9.4 trillion.

The trade figures in May caused a slight drop in trade surplus to $2.31 billion compared to $2.34 billion in April.

Elsewhere, BPS said non-oil exports, a measure of the country's export competitiveness, fell 0.8 percent to $3.72 billion from April.

And oil exports fell 3.9 percent to $979.7 million due to global oil prices stabilizing in May after rising in April.

Despite the decline in the export figures, however, the country still posted slight increases in exports to Japan and the U.S.

Exports to the U.S. and Japan rose to $645 million and $505.4 million from $592.2 million and $493.6 million in April, respectively.

Meanwhile, non-oil imports fell 3.8 percent to $1.90 billion, suggesting the import of capital goods for investment continued to drop.

Oil imports rose 6.6 percent to $487.8 million.

Indonesia, Asia's only member of the Organization of Petroleum Exporting Countries, imports only a small amount of refined oil products.