Imports up in July, reversing declining trend

Imports up in July, reversing declining trend

A'an Suryana, The Jakarta Post, Jakarta

Imports were up in July, reversing the declining trend for
most of the year amid falling investment.

But analysts said this was not necessarily a sign of returning
investment in the country.

The Central Bureau of Statistics (BPS) said on Monday that
imports in July had increased by 8.09 percent to US$2.60 billion
from $2.4 billion in June. On an annual basis, imports were up
6.1 percent.

BPS chief Soedarti Surbakti said the increase in imports were
mainly driven by the rising demand in capital goods, such as
machinery.

While in theory the increase could indicate that new
investments had been taking place in the country, Standard
Chartered Bank economist Fauzi Ichsan said it was too early to
jump to such conclusions.

He said that the higher imports was probably because companies
wanted to replace old machinery to maintain current production
levels.

Fauzi explained that if the rising imports of capital goods
continued for six months, then it could be concluded that new
investments had returned to the country.

Investment has been falling due to various uncertainties,
including labor conflicts, legal uncertainty and security fears.
During the first semester of this year, foreign direct investment
fell by nearly 50 percent compared to the same period last year.

Earlier reports said that many foreign companies had relocated
their operations to other countries in the region which offered a
better investment climate.

Investment is a crucial factor to push economic growth. So
far, economic growth has been relying on domestic consumption as
both investments and exports have been weakening.

BPS also said that exports in July dropped 1.2 percent to
$5.01 billion compared to June levels.

The sharp increase in imports and lower exports caused July's
trade surplus to fall 9.4 percent to $2.41 billion from a month
earlier.