RI to rake in US$8.6 billion from services

JAKARTA (JP): Minister of Finance Mar'ie Muhammad has projected that Indonesia will rake in $8.6 billion in foreign exchange from the services sector next fiscal year, mostly from tourism, air freight and workers remittances.

Speaking at a House Budgetary Commission hearing last week, Mar'ie said the country expected to generate $7.23 billion from foreign tourism next fiscal year.

In addition, Mar'ie said the country expected to collect $1.2 billion from air transportation and aircraft maintenance services, $871 million from remittances of Indonesia workers working overseas, mostly in Malaysia and Saudi Arabia, and $300 million from telecommunications services.

Mar'ie, however, did not provide figures on how much Indonesia would spend in foreign exchange in the above sectors. It is likely the country will still suffer serious deficits in most of the sectors however.

Tourism is the only service sector which currently contributes net foreign exchange inflows to the country's balance of payments.

It has been projected that Indonesia generated $6.27 billion from more than five million foreign tourists last year, compared to $5.2 billion gained from 4.3 million visitors in 1995 and $4.7 billion from 4.01 million tourists in 1994.

Indonesia aims to increase annual revenue from foreign tourism to $8.9 billion by 1999, making it the second largest foreign exchange earner after the oil and gas sector.

The other services sector industries' deficits means the overall deficit in the services sector has been projected at $15.2 billion next fiscal year, from $13.97 billion this fiscal year. The biggest deficit is always in the sea transportation sector.

Mar'ie said Indonesia would spend $5.61 billion in foreign exchange on paying foreign shipping companies to transport Indonesia's exports and imports next fiscal year, which begins in April.

Foreign shipping companies transport more than 95 percent of Indonesia's exports and imports.

Mar'ie said the government had taken various steps to empower local shipping companies to transport more exports and imports. However, he added, that the situation had not yet improved significantly.

To reduce the services sector deficit, the government plans to woo more foreign tourists and export more workers.

The government expects tourism to become the country's biggest foreign exchange earner, outperforming the oil and gas sector, by the end of the Seventh Five Year Development Plan in 2004.

President Soeharto said last November that Indonesia was aiming to welcome 11 million visitors in 2005; it is hoped they will spend $15 billion.

This is almost double the government's target of 6.5 million tourist arrivals in 1999, the final year of the sixth development plan.

The country has also taken a number of steps to lure more locals to work overseas.

Since July last year, Bank Indonesia (the central bank) has provided subsidized liquidity credits to banks, which are expected to rechannel the funds to people wanting to work abroad and to companies specializing in sending workers abroad.

The central bank has appointed five banks; state banks Bank Negara Indonesia 1946, Bank Rakyat Indonesia and Bank Bumi Daya, Bank Tabungan Negara, and Bank Bukopin to channel the subsidized credits.

Mar'ie said the central bank earmarked Rp 30 billion ($12.5 million) this fiscal year for such subsidized credits, of which only $2.5 million had been channeled to eligible recipients through the appointed banks.

About 900,000, mostly unskilled, Indonesians currently work legally overseas. Those working illegally, especially in Malaysia, are believed to number several hundred thousand.

The government has projected that an estimated 2.5 million people will be working overseas in 2000, contributing about $12.5 billion in foreign exchange annually.

Indonesia still suffers serious deficits in the manpower sector, mainly because it paid out $2.4 billion in salaries to foreigners working in Indonesia last year. (rid)