Rini pushes countertrade deals to help exports

Adianto P. Simamora The Jakarta Post Jakarta

The move by Minister of Industry and Trade Rini M. Soewandi to push for countertrade deals with other nations should help increase the country's exports amid the current global economic slowdown, but one analyst warned that Rini had also to coordinate with other ministers concerned to avoid problems at home.

"The countertrade program is OK to help boost exports in the short term, but it can do damage at home if it is not well coordinated with other ministers," economist at the Institute for the Development of Economics and Finance (Indef) Bustanil Arifin said on Friday.

He pointed out as an example that if Rini wanted to barter Indonesia's export products with rice from a country, she had to talk first with the minister of agriculture, as the deal could add to pressure on the price of rice at home. That, in turn, would affect farmers income, because imported rice under the countertrade mechanism would likely be exempt from the 30 percent import tariff.

Another example, he said, was that if Rini planned to trade Indonesia's fertilizer products, she had to make sure that the fertilizer supply for farmers at home was sufficient.

On her various trips overseas, Rini has been trying to promote countertrade deals between Indonesia and neighboring countries in the region as a way of helping to avoid a severe downturn in exports, amid the economic recessions in the U.S. and Japan, Indonesia's main export market.

Resolving the country's export woes is Rini's responsibility. Indonesia's exports fell by 9.8 percent to US$56 billion in 2001, from the previous year's level, and was the largest decline in 12 years.

Last month, the Central Bureau of Statistics (BPS) reported that exports had dropped by 13.41 percent in March to $4.54 billion from the same period last year, due to the global economic slowdown.

Rini has signed several memorandums of understanding (MoUs) to boost countertrade deals, including with the governments of India, Thailand, Vietnam, China and Cambodia. But the total worth of the MoUs has not yet been made publicly available.

Under the countertrade deal with Cambodia, for example, Indonesia will import around 100,000 tons of rice in return for the export of a variety of agricultural equipment.

With India, the deal involves the planned construction of a 120-kilometer railway in South Sumatra by India Railway Construction Company. In exchange, Indonesia will export coal and crude palm oil products.

From Thailand, Indonesia will import some 200,000 tons of rice while the neighbor has agreed to purchase the CN235 aircraft, train cars, and fertilizer products, all worth around $40 million.