Import curb sought to ease account deficit
Import curb sought to ease account deficit
JAKARTA (JP): The government should take down-to-earth measures to curb import growth and drive up exports to reduce the growing current account deficit, executives suggested yesterday.
They said that without drastic measures it will be difficult for the government to reduce import growth from 32 percent last year to 11 percent this year and to achieve the projected 19.5 percent growth for exports.
Chairman of the Indonesian Importers Association, Amirudin Saud, suggested that the government introduce new policy instruments to curb imports, especially for consumer goods.
"So far the government allows everyone to import as many consumer items, like fruits and vegetables, as they want. Now, it needs to regulate this so that everybody, including foreign restaurants, will use domestic products," Amirudin said.
In a press briefing on the 1996-1997 budget plan, Minister of Finance Mar'ie Muhammad estimated that the current account deficit would expand to US$7.9 billion for the current fiscal year from $3.49 billion last fiscal year due to the higher growth rate of imports than that of exports.
Indonesia's non-oil exports grew by 14.2 percent during the January-September period of last year to $25.14 billion from $22.02 billion in the same period of 1994. Meanwhile, imports grew by 32.4 percent during the same period of last year with imports of consumer goods rising by 70.9 percent.
Impossible
However, some analysts consider it impossible for the government to slash import growth.
"I think it's almost impossible for the government to take such a drastic cut in import growth given its expectation of more than 7 percent in economic growth," the President of PT Daiwa Indonesia Securities, Mitshou Kiyokawa, said.
In the same press briefing, Central Bank Governor J. Soedradjad Djiwandono contended that the government would manage to check growth of imports at 11 percent.
"Of course, we have to take a number of measures to reach the target," Soedradjad said.
He noted that Indonesia has experienced a sharp fluctuation in import growth. Imports grew by 21.3 percent in the 1999-1990 fiscal year. The import growth rate increased to 31 percent in the 1990-1991 fiscal year but dropped drastically to 11.4 percent in 1991-1992, then it fell further to 9.7 percent in the 1992- 1993 fiscal year and 6.6 percent in 1993-1994.
"Therefore, it will not be impossible to reach the target as the growth rate of imports has not been steady," Soedradjad said.
Laksamana Sukardi, chairman of the Reform Consulting Institute, suggested that the government "adjust" the exchange rate or devalue its currency and reschedule large projects to curb import growth.
"That would make the target growth for imports more realistic. However, both measures have no direct effects on exports," Laksamana told The Jakarta Post yesterday.
To achieve more exports, he suggested that the government take down-to-earth measures to abolish economic distortions created by monopolies, oligopolies, cartel-like practices and collusion between officials and businessmen.
"We have exhausted all the alternatives, but still we could not strengthen our export competitiveness. We have no more choices but dismantling those anti-market practices," he said.
Many expect better export performance with the recent merger between the industry and trade ministries.
When proposing the 1996-1997 budget plan to the House of Representatives on Thursday, President Soeharto underlined the objective behind the merger of the two ministries.
"I have combined the industry ministry and the trade ministry into one ministry. Hopefully with this measure our effort to increase exports will have better direction and coordination," President Soeharto said.
Minister of Industry and Trade Tunky Ariwibowo told journalists on Thursday that he will cut the "input costs" which have burdened exporters.
"The government will soon issue a new deregulatory package which will, among other things, cut in input costs," Tunky said. (13/rid)