Merrill Lynch upbeat about Indonesia's economy

JAKARTA (JP): The outlook for the Indonesian economy remains promising in the fourth quarter despite the fall in the country's exports during the first five months of this year, according to Merrill Lynch, a noted multinational securities company.

In its latest Asian Economic Commentary, Merrill Lynch said that Indonesia's exports have shown signs of recovery after suffering a decline in the January-May period.

Non-oil exports grew by eight percent in the March-April period, as compared with a 1.5 percent drop during the October- February period, it said, adding that total exports fell by about one percent during the first five months of 1994, while imports rose by almost 10 percent.

"In turn, this has led to a drop on the trade surplus by almost one quarter from the same period a year ago," it said.

Prospects for non-oil exports should continue to grow, Merrill Lynch said.

"The surge in investment approvals so far this year -- which could be further bolstered by the June deregulation package -- is likely to lead to a deepening and widening of the industrial base over time," it said, adding that in return, a growth in production capacities in non-oil exports should be seen.

Merrill Lynch forecasts that Indonesia's non-oil exports are likely to rise 12 percent to 14 percent in 1994-1995.

According to official data, Indonesia's total exports rose by 16 percent to $28.88 billion in 1993-1994 from $24.28 billion in 1992-93. The government projects that the exports will increase to around $33.58 billion in the current 1994-1995 fiscal year, which began in April.

Non-oil exports contributed around 75 percent to the country's total export earnings last fiscal year.

Coordinating Minister for Industry and Trade Hartarto said recently that non-oil exports reached $2.7 billion in June, an increase of 14.9 percent from the same period of last year.

Around 70 percent of Indonesia's non-oil exports have been destined to Japan, Taiwan, the United States, Singapore, South Korea and Australia. (hen)