Exports likely to drop this year due to lack of promotion
JAKARTA (JP): Local exporters forecast on Wednesday another drop in the country's non-oil exports this year because many buyers have switched to other Asian countries.
Newly appointed executive director of the Indonesian Exporters Association (GPEI) Rudy Lengkong attributed the loss of business to the lack of trade promotions since the crisis hit the country in the middle of 1997.
He said the gloomy outlook was reflected by the drop in orders from overseas buyers in the first quarter of the year, which was particularly pronounced during the first two months.
He said total exports, inclusive of oil and gas, dropped nearly 25 percent in January to US$3 billion from $3.91 billion in December, and from $4.15 billion in January last year.
According to the Central Bureau of Statistics, non-oil and gas exports declined 27 percent in January to $2.36 billion from $3.24 billion in December.
Total exports fell nearly 9 percent to $48.85 billion in 1998 from the previous year's level. Non-oil and gas exports dropped 2.2 percent to $40.98 trillion from $41.82 billion.
"Lack of trade promotion due to the closing of all Indonesian Trade Promotion Centers has caused us to lose many of our markets to other Asian countries, such as Malaysia, China, Thailand and Vietnam which are very active in promoting their products," he said in a news conference.
The government-sponsored overseas centers were closed in April last year due to financial difficulties.
Growing business uncertainty in the country also led foreign buyers of Indonesian products to take their business to other Asian countries, Rudy said.
"It would not have happened if Indonesia, through its overseas trade promotion, could have countered the negative reports on the country."
The former senior trade ministry official said his association also urged the government to consider dividing the Ministry of Industry and Trade. They proposed establishment of a ministry handling industry and domestic trade and one for international trade to speed up efforts to increase exports.
Establishment of the international trade ministry would be more effective in helping the private sector enter foreign markets, he believed.
The government combined the Ministry of Trade and the Ministry of Industry in 1995 in a bid to improve efficiency in handling trade and industrial activities.
"Our trade promotions were abandoned in the past year and a half because the Ministry of Industry and Trade has too many things too handle." He added he did not believe the Directorate of Foreign Trade was able to meet the requirements.
Rudy said it would be difficult to increase exports in 1999 because the export value in January was even lower than sluggish months in 1998 and 1997.
Financial problems also would continue to hamper the country's export-oriented companies, most of which rely on imported raw materials.
"The lack of financing in importing raw materials will definitely remain a big problem," he said.
The sharp drop in the value of rupiah against the U.S. dollar has caused costs of imported materials to soar, forcing many export-oriented companies to stop operations. Many companies which previously relied on banks to finance their imports are rejected for bank export credits due to poor prospects.
International banks also often refuse locally issued letters of credit to finance imports because of depleted confidence in the institutions. (gis)