JP/12/Exports

Indonesia's 2001 exports to fall short of target: BPEN by Damar Harsanto

JAKARTA (JP): The National Agency for Export Development (BPEN) said that Indonesia's 2001 non-oil and gas exports would fall short of the target of US$49 billion (Rp 465 trillion) due to an expected fall in demand from the main buyer, the United States, following terrorist attacks on the country.

BPEN's head Gusmardi Bustami said the U.S. would spend a lot of money on restoring the massive losses and damage caused by the terrorist aerial attacks on the country's financial center, the World Trade Center and defense headquarters, the Pentagon.

The U.S. would cut spending on consumption as it focused on improving its defense and security systems and bailed out the industries impacted by the terrorist attacks, including the airline industry, he said.

He further predicted the U.S. would also cut its investments abroad.

"It will be difficult for us to reach the target as the U.S. will prefer to earmark its funds for domestic recovery rather than investments abroad," Gusmardi told reporters following a media briefing jointly held by the Indonesia-Netherlands Association (INA).

Initially, the government set a 7.5 percent growth in non oil and gas exports on the back of astounding growth of 23 percent in export earnings last year. But, it later scaled back the target to between two and three percent due to the economic slowdown in Indonesia's export destinations, including the U.S., Japan, and Singapore.

Exporters further revised down the export targets following the U.S. terrorist attack.

Gusmardi is among the first governmental officials to officially warn of the impact of the U.S. attack on the country's exports, but he did not specify the extent of the impact.

Gusmardi said the country's non-oil and gas export earnings slid by two percent to $27 billion in the first seven months of the year, compared to the corresponding period in 2000.

Gusmardi said Indonesia's exporters were seeking to penetrate new markets for their products to make up for the shortfall in orders from its traditional export markets.

With regard to exports to the Netherlands, INA's director Elmar Bouma said Indonesia's exports to the Netherlands fell by 11 percent to $629 million in the first five months of this year.

Indonesia's exports to the Netherlands stood at $1.8 billion in 2000.

Bouma said the Dutch government would send experts to advise Indonesian exporters on how to improve their management in compliance with requirements set by the Netherlands and other European markets.

"Our experts will be available at BPEN's training center by the end of this month. Local exporters may benefit from them on how to comply with standards required by buyers in the Netherlands and European countries," he said.

Gusmardi earlier said the agency planned to reopen its export promotion center in Los Angeles and Dubai, the capital of the United Arab Emirates, in November, to seek alternative markets.

Gusmardi said Los Angeles would become a gateway to U.S. neighboring countries such as Mexico and Canada, while Dubai would be a gateway to the Middle East.

The agency used to have 13 trade centers worldwide, located in Dallas, Los Angeles, New York, Mexico City, Hamburg, London, Rotterdam, Budapest, Baghdad, Dubai, Jeddah, Osaka and Sydney. All the centers were closed in July 1998 following the economic crisis.

The Osaka center became the first to resume operations when the agency reopened it in December last year.(dmr)