Govt export target gets cautious response

Govt export target gets cautious response

Dadan Wijaksana, The Jakarta Post, Jakarta

A relatively weak currency and a likely recovery in the global
economy next year could mean the government's 5 percent growth
target for non-oil and gas exports is realistic, economists said,
but added that much depended on a recovery in the U.S. economy.

Bank Mandiri chief economist Martin Panggabean told The
Jakarta Post that sales of non-oil and gas exports in 2002 would
be able to grow by 5 percent.

"The (5 percent) target should not be too hard to meet because
our products remain competitive under a weak rupiah, while
demands are expected to rise on the back of a probable speedier
recovery among developed countries," Martin said over the
weekend.

He was responding to the government's non-oil and gas export
growth target of 5 percent next year, which Minister of Industry
and Trade Rini Soewandi said last week was a feasible target.

Boosting sales, he said, depended on economic recoveries in
the U.S. and Japan, both of which are Indonesia's largest export
markets.

As for the rupiah, the currency's current levels have made
Indonesia's export commodities more price competitive, he added.

Export sales in September grew by 4.21 percent after falling
for two straight months since June.

Sales for that month totaled US$5.1 billion, with non-oil and
gas exports sales reaching $3.9 billion, or close to a 4 percent
rise compared to the month before. In the nine months to
September, exports hit $43.7 billion, which is, however, $2.78
billion less than sales over the same period last year.

Still, the outlook could be improving considering last week's
report that the U.S. economy grew substantially faster during the
third quarter.

The U.S. gross domestic product (GDP) grew by a 3.1 percent
annual rate during the third quarter, compared to 1.3 percent
during the previous one. The GDP measures the total value of
goods and services produced by a country in a year.

However, the latest data on massive job cuts in the
manufacturing sector suggest that the faint recovery in the U.S.
might be weakening instead.

Citibank economist Anton Gunawan, while citing the 5 percent
target as realistic, warned of potential problems arising from
higher risk premiums on shipping in and out of the country.

This higher risk premiums were imposed by the international
reinsurance market following the Bali bombing.

Anton argued that a more expensive premium would eventually
inflate the price of Indonesian export goods, making them less
competitive.

"The government has to watch out, although I don't think the
impact will be all too damaging to our overall export sales,"
Anton said.

Following the Bali blasts, Indonesia was included on a list of
potential war zones, resulting in higher risk premiums for every
ship traveling in and out of the country.

Export sales contribute to about 9 percent of the nation's
economic growth, while the other growth engines are investment
and domestic consumption.