Luhut downplays impact of U.S. economic growth

JAKARTA (JP): Minister of Trade and Industry Luhut Pandjaitan played down on Wednesday the impact of the slowdown in the U.S. economy on Indonesia's exports.

Speaking at a hearing with the House of Representatives (DPR), Luhut said the impact of the U.S. economic slowdown would be minimal because most of goods exported to the country comprised primary consumption products such as textiles, garments and shoes.

"Normally, the demand for such products is not affected by an economic slowdown," he told House Commission V for industry and trade affairs.

The minister was optimistic that the country's exports would continue to increase despite the contraction in U.S. economic growth, which according to analysts, could trigger a global economic slowdown.

Indonesia's exports dropped by 5.66 percent to US$4.84 billion in January from $5.13 billion in December due to a drop in orders from main buyers.

According to the Central Bureau of Statistics (BPS), export earnings in January only declined in the non-oil and gas sector, which fell by 10.37 percent to $3.50 billion compared to the previous month.

But if it is compared to the corresponding period last year, the January exports showed an increase of about 10 percent from $4.39 billion. In the same period, non-oil and gas exports alone rose by 7 percent to $3.5 billion from $3.25 billion.

Gusmardi Bustami, the head of National Agency for Export Promotion (BPEN), said exports to the United States still recorded an increase in January this year as compared to the same month last year

He did not provide a breakdown for January's exports but said that the fall in the volume of exports between December and January was seasonal as most buyers cut their orders at the start of the year.

"The demand will surge again in April as orders usually rise to meet higher demand for the summer season," Gusmardi explained.

Luhut said that the government had also anticipated the downturn by boosting the export promotion drive in the U.S. and other industrialized countries.

This year, the government through the BPEN plans to attend forty-six international exhibition involving exporters, up from twenty-six exhibitions last year.

However, exporters will have to diversify their markets to other countries in East Asia, South America and Africa so as to increase exports, the minister said.

Last year, Indonesia exported a total of $62.6 billion, of which non-oil and gas exports rose by 22.91 percent to $47.78 billion, while oil and gas exports jumped by 45.39 percent to $14.24 billion.

For non-oil and gas exports, the main destinations are the U.S. with $7.9 billion, Japan ($7.4 billion), Singapore ($5.8 billion), Malaysia ($1.8 billion), China ($1.77 billion), South Korea ($1.47 billion), Germany ($1.43 billion), Taiwan ($1.37 billion), and Australia ($903.4 million).(05)