Non-oil trade deficit will turn around in 1997: Tunky

JAKARTA (JP): The country's non-oil trade deficit is expected to turn around next year with the government predicting this year's US$450 million deficit will become a $900 million surplus next year.

Minister of Industry and Trade Tunky Ariwibowo announced yesterday that non-oil exports were likely to grow 11.4 percent this year to between $38.8 billion and $39.1 billion, from $34.95 billion last year.

Next year's non-oil exports were projected to be worth between $44.7 billion and $45.1 billion, up around 15 percent on this year's estimate.

Non-oil imports were projected to grow 4.45 percent this year to between $39.2 billion and $39.6 billion, from $37.72 billion for 1995. Next year's non-oil imports were expected to be worth between $43.8 billion and $44.2 billion, rising around 11.7 percent.

Tunky said this year's projected 11.4 percent growth in exports was among the highest in East Asia.

"In East Asia, Indonesia may be the only country which closes the year of 1996 with export growth likely to exceed its export performance in the previous year," Tunky told reporters at an end-of-year briefing.

Tunky said exports of manufactured products contributed about 74 percent of the value of non-oil exports. Exports of manufactured products rose 11.1 percent to $20.6 billion for first nine months of this year.

Electronics, steel, machinery, automobiles, food and beverages and basic chemicals are among the country's fast growing manufactured exports.

Tunky said the government would include crude palm oil, its derivatives and pulp and paper in its export priority program, along with textiles, electronics, wood and rattan products, footwear and leather goods.

Products listed in the program will get special treatment, including tax, customs and banking breaks, on their way to export markets.

Tunky acknowledged the growth of non-oil exports had slowed in recent years while imports were soaring.

Non-oil exports grew from $27.1 billion in 1993 to $30.4 billion in 1994 and $34.9 billion in 1995. Non-oil imports rose from $26.2 billion in 1993 to $29.6 billion in 1994 and $37.7 billion in 1995.

Tunky said the poor performance of textiles and timber products had caused the non-oil export slowdown.

Textile exports dropped from US$6.1 billion for 1993 to $5.8 billion for 1994 but rose again to $6.2 billion for 1995. Textile exports grew 5.4 percent to $4.1 billion for the first eight months of this year.

Tunky said the domestic supply of textiles for export had increased only slightly because of sparse new investment. Rising wages without significant productivity increases had also caused the slowdown.

Exports of timber products fell from US$5.5 billion for 1993 to $5.1 billion for 1994 and $4.99 billion for 1995. For the first eight months of this year, exports of timber products fell 0.72 percent to $3.28 billion.

Tunky said exports of timber products had fallen because of decreasing demand in export markets, especially Japan: Japan now applied higher tariffs to Indonesian plywood.

Exports of textiles and timber products constituted more than 30 percent of Indonesia's non-oil exports last year.

On macroeconomics, Tunky said the country's economy was expected to grow between 7.6 percent and 7.9 percent this year, and by between 7.6 percent and 7.8 percent next year.

Inflation was expected to lie between 6.5 percent and 6.8 percent this year, lower than last year's 8.64 percent.

Domestic and foreign investment was projected to grow between 10.7 percent and 11.2 percent this year, down from the 15.2 percent growth recorded last year. (rid)

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