Indonesian exports promising: Lehman
Indonesian exports promising: Lehman
JAKARTA (JP): Global investment bank Lehman Brothers said
yesterday that Indonesia's export picture is "reasonably
reassuring and expected to brighten in the coming months" on the
back of "vibrant" growth in a number of industries.
In a report made available yesterday, Lehman's assessment is
contrary to the popular opinion that the recovery in exports
since late 1993 has been soft and a cause for some concern.
Lehman predicts that Indonesia's nominal merchandise exports
should expand at a rate of around 16 percent per annum, while
nominal merchandise imports will not exceed 15 percent by late
1996, keeping the current account deficit more or less stable as
a percentage of the gross domestic product.
It said the growth of some industrial exports and foreign
investment approvals, combined with recent corrective measures
taken by the government, are key factors in the improving export
picture.
"While exports of Indonesia's two leading export items --
garments and textiles, and plywood -- have been plagued by
difficulties, their relative importance in total exports may be
diminishing," the report said, quoting Miron Mushkat, chief
economist for Lehman Brothers Asia-Pacific.
Another factor which should contribute to an increase in
foreign investment is the government's revamping of the foreign
investment code and liberalization of the tariff structure, both
of which were introduced after the deceleration in export growth
and steep appreciation of the Japanese yen.
"These corrective measures go along way toward addressing
investor concerns and improving the investment climate. The
approval figures for last year for the imports of the capital
goods bear this out, and it is only a matter of time before that
show of strength translates into significantly greater momentum
on the implementation front," explained Mushkat.
Approval figures for last year stood at US$24 billion, with
approvals for the first four months of the current year at $16
billion.
"The tariff restructuring package has eliminated some of the
uncertainty facing local manufactures and the suppliers of
credit, both of whom may now be more willing to commit capital to
long-term domestic projects following its introduction," he said.
Mushkat concluded: "One is tempted to argue that, given the
circumstances, the persistently high risk premiums attached to
Indonesia's financial assets should shrink."(31)