Exports up 26% in first seven months

Zakki P. Hakim, The Jakarta Post/Jakarta

Amid lingering uncertainty over the economy, as evident from the volatile rupiah, the Central Statistic Agency (BPS) reported on Thursday that the country's exports continued to put in a strong showing during the first seven months of the year.

Thanks in part to strong global demand for crude palm oil, coal and other mining products, January-July exports stood at $47.58 billion, a 25.85 percent increase over the same period in 2004.

Non-oil and gas exports, which account for more than three quarters of Indonesia's total income from international trade, rose 27.69 percent to $37.18 billion in the first half of the year compared to the corresponding period in 2004.

Sales of oil and gas, meanwhile, rose 19.69 percent in the same period to $10.40 billion.

Indonesia's exports hit a record high last year, reaching $69.71 billion, up 11.49 percent from 2003. This was mainly attributable to strong sales of non-oil and gas commodities and goods, including palm oil, electronics goods, clothing, coal and tin.

Despite the encouraging trend and a good chance of this year's exports exceeding last year's, Minister of Trade Mari E. Pangestu maintained her conservative stance as regards this year's export targets.

She repeatedly pointed out that the strengthening greenback had helped boost the value of the country's exports. However, this did not mean an improved performance in terms of volume and production.

"We have to have a target that is based not just on value but also volume," Mari said.

She said that real growth, which took account of volume growth, during the first six months of the year stood at 10.2 percent.

"Considering the current economic situation, we prefer to set a conservative target of between 6 percent and 8 percent real growth this year," she said, while pointing out that 8 percent growth was still high.

She said that although the weakening of the rupiah against the U.S. dollar should make Indonesian products more competitive on global markets, it would also increase production costs here as many industries rely heavily on imported raw materials.

"Manufacturing might slow down, but exports of commodities should benefit from the weakening rupiah," she said.

The ores, slag and ash sector was the strongest performer, with exports more than doubling to $1.89 billion from $681.4 million in the same period of 2004.

The mineral fuels sector, which includes coal, also showed impressive growth of 81 percent, with export value increasing to $2.38 billion.

According to the BPS, global demand for coal has increased as countries around the world seek alternative energy sources due, in part, to current soaring oil prices.

The country's trade balance recorded a surplus of $14.41 billion for the first seven months of the year, with imports standing at $33.17 billion.

The July trade surplus came in at $2.17 billion.

Imports rose to $4.82 billion in July, 2.11 percent higher than the $4.72 billion recorded in June.