Non-oil trade to suffer deficit
Non-oil trade to suffer deficit
JAKARTA (JP): Indonesia's non-oil trade balance this year will
likely deteriorate to deficit levels reminiscent of the 1980s, a
noted economist said here yesterday.
"It will be difficult to compensate for the shortfall by the
end of this year as our non-oil trade deficit reached US$3.1
billion during the first nine months," said Suhadi Mangkusuwondo,
a former foreign trade director general at the trade ministry.
Data from the newly-formed Ministry of Industry and Trade show
that during the first nine months of this year, Indonesia's
exports of non-oil products reached $25.2 billion, indicating an
increase of 14.4 percent over the same period of last year.
But its non-oil imports during the first nine months of this
year reached $28.3 billion, up 32.4 percent from the
corresponding period of last year.
He pointed out that this year's total exports, including oil
and natural gas, amounted to $32.9 billion and total imports
$30.4 billion for the nine months until September.
But Suhadi, a economics professor at the University of
Indonesia, pointed out that there is little need to worry if the
import growth is due to an increasing demand for capital goods
and raw materials at home.
"Imports of goods that are used in manufacturing activities
will in two or three years spur the growth of exports," he was
quoted by Antara as saying.
He said that Indonesia is not alone in that matter. Malaysia
and Thailand also saw their imports of capital goods and raw
materials increase as a result of rapid investment growth.
"The rapid growth of imports of capital goods and raw
materials has to do with increasing capital inflows," he said.
He said, however, that if the imports of consumer goods
drastically increase, then "we should pay serious attention to
the trend".
The government's decision to tighten the regulations on non-
bank finance companies, he said, is the right way to improve the
country's balance of payments.
The government recently closed non-banking financial services
-- such as leasing, factoring, credit card and consumer financing
-- to newcomers and subjected the eligible 253 financial
companies to tighter regulations.
The new ruling also imposes new lending and borrowing
restrictions on financial companies, who Suhadi blamed for the
sharp increase in short-term foreign borrowing.
"In this case, the government should control the inflow of
short-term loans to prevent a situation similar to the 1994
Mexican financial crisis," he said. (13)