Exports increase to three-year high

The Jakarta Post, Jakarta

Exports in June increased by 7.33 percent to US$5.28 billion, the highest monthly export value in the past three years, the Central Statistics Agency (BPS) reported on Friday.

The agency said that this should provide further evidence that the country's export performance had started to recover after dwindling last year due to the global economic slowdown and a number of problems at home.

BPS said that exports in the first semester of this year also increased by 10.53 percent to $30.35 billion in the same period last year.

While the agency said in its report that the higher export was mainly driven by oil exports (international prices of oil declined during the period), BPS deputy chief Slamet Mukeno said that there had been strong demand for Indonesian non-oil and gas products from the U.S. and China.

The U.S. has been the country's traditional export market, while China has also started to become the target of local exporters. The U.S. authority reported earlier stronger-than- expected economic growth in the second quarter, raising hopes that recovery was on the way.

BPS said that non-oil and gas exports in June rose by 7.71 percent to $4.22 billion from the level in May, while first semester figures grew by 7.30 percent to $23.41 billion.

Export value to the U.S. in June totaled $622.5 million. No figure was given for the amount of exports to China.

Slamet said he was optimistic the country's full-year export target of around $60 billion this year could be achieved even if export growth would be flat in the coming months.

Indonesia has been struggling to boost exports after a poor performance last year as the global economy had been suffering from years of recession, while local exporters had to deal with various local problems, including labor conflict, security problems, inefficiency, and the lack of financing facility.

Increasing exports is crucial to achieve a stronger economic growth needed to help absorb the huge unemployment problem created by the late 1990s economic crisis.

Experts have said that in order to push exports higher, the government must quickly eliminate the rampant illegal levies collected by corrupt officials, resolve the labor problems, and push banks to provide affordable loans to exporters so they could invest in new machinery to help boost competitiveness against exports from other countries like China, India, and even Vietnam.

Meanwhile, BPS also reported that imports in June declined by 15.24 percent to $2.43 billion from the level in the previous month, while first semester imports were also down by 16.76 percent to $16.29 billion compared to the level in the same period last year.

The statistics gave further evidence that the country has not seen significant amounts of new investments both by foreign investors and domestic investors.

Analysts have said that because of lingering uncertainties investors have so far declined to make new investments despite positive progress in the area of macroeconomy as reflected in the stronger exchange rate of the rupiah, lower inflation, and falling Bank Indonesia benchmark interest rate.

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