Recession, price drops cause decline in exports
Recession, price drops cause decline in exports
JAKARTA (JP): The world economic recession, the depressed
market of primary commodities and the inability to export more
higher value-added products are the major reasons behind the
decline in Indonesia's non-oil exports over the past few months,
experts say.
Minister of Trade Satrio B. Joedono told a seminar on "The
impact of General Agreement on Tariffs and Trade (GATT)/Uruguay
Round talks on the business world" that although Indonesia had
developed wide export markets for its products, falling prices
have decreased its export earnings.
Economist Suhadi Mangkusuwondo said the depressed market of
primary commodities, which accounted for 30 percent of
Indonesia's total exports, had contributed to the decrease in the
country's exports.
"Red-tape however, is still the main reason that Indonesian
exports are less competitive on the international market," he
said.
Economist Dorodjatun Kuntjorojakti, who is also dean of the
Faculty of Economics at the University of Indonesia, said that
although red-tape and the recession should be blamed for the
export decline, Indonesia's unreliable delivery system was
another cause for the slackening exports.
"The current market trend has increased the competition not
only in terms of price and quality, but also of the reliability
of delivery," he said.
Dorodjatun explained that the "life cycle" of a product was
now much shorter than it was before. Certain countries which
owned modern transshipment harbors, such as Singapore, could
easily take advantage of the efficient transportation system.
"Inadequate port facilities are serious obstacles to the
growth of our exports," he warned.
Change
According to Dorodjatun, another cause for the export setback
was the changing characteristic of world trade, in which
companies dealt with each other under intra-company transactions.
"It seems that we are now entering a new pattern in which
investment generates trade and not vice versa," he said.
He explained that in the past, trade barriers in various
countries encouraged multinational companies (from industrial
countries) to build plants overseas.
"This won't continue because tariffs in the industrial
countries have been lowered. But because these multinational
companies have already set up their plants around the world, new
issues related to copyright and intellectual property rights have
emerged," he said.
These problems, in turn, resulted in the need for new rules --
which are the Trade Related Aspects of Intellectual Property
Rights (TRIPs) and the Trade Related Investment Measures (TRIMs)
-- to be included in the GATT agreement, he said.
"So there seemed to be a kind of "conspiracy" that caused
trade regulations such as TRIPs and TRIMs to be issued," he said.
Preparation
According to Joedono, Indonesia now has to prepare for a world
economic recovery. The U.S. economy, for example, is now growing
robustly and Europe is showing signs of strong recovery as well.
"Therefore new deregulation and bureaucratic reform measures
are urgently needed," he said.
Suhadi said that Indonesia's business world had no other
choice but to prepare themselves to meet GATT regulations. "They
have been given enough time to do so," he said.
He added, however, that the business world should be well-
briefed on the technical details of the GATT rules and on the
procedures for their enforcement.(pwn)