Rini urges exporters to expand market
Tantri Yuliandini, The Jakarta Post, Jakarta
Minister of Industry and Trade Rini Soewandi urged Indonesian exporters to help limit the impact of the global economic recession by exploring markets outside the United States.
"The recession has already been felt in our major export destinations such as the U.S., Japan, Europe, and Singapore, so we need to explore other markets to avoid a downturn in our exports," Rini was quoted by Antara as saying.
She said that Indonesia's non-oil and gas exports, as of the third quarter of the year, had dropped about 20 percent compared to the same period last year.
"But the decline could be sustained at between nine to 10 percent at the end of the year if we could shift to other markets," she said, adding that Indonesian exporters should be more aggressive in marketing their products in China, India, the Middle East, and in African countries.
Rini's statement came after the U.S. National Bureau of Economic Research made the first formal announcement Monday that the U.S. economy was already in recession, with other countries likely to follow suit.
Center for Strategic and International Studies economist Pande Radja Silalahi downplayed Rini's suggestion to diversify markets. Although not dismissing them completely he said that in practice it was not so simple.
"This is business, not a football game where a player could kick the ball wherever he pleases. It takes years to open up new markets," Pande told The Jakarta Post.
He urged exporters to not altogether abandon the U.S. only because of a recession, but rather to scrutinize more on what the country needed and to be more active in marketing in those areas.
Other economists earlier said that a recession in the U.S. may mean a slowdown in its consumption of high-end goods, but demand for low-end products -- goods that Indonesia largely provides -- would instead thrive as its population looked for cheaper alternatives.
"We need to maintain our existing market while at the same time probe for other potential markets," Pande said.
Furthermore, secretary-general of the Indonesian Textile Association (API) Indra Ibrahim said the industry would not survive without its American market.
He said that exports to the U.S. comprised 26.3 percent of all Indonesian exports, with the second-largest market, the United Kingdom, accounting for 6.4 percent. Exports to Japan comprised 5.9 percent and to the United Arab Emirates 4.3 percent of total exports.
"Do you see the vast gap? If there was any interference in exports to the U.S. it would spell trouble to the whole textile and clothing industries," he told the Post.
Indra said that although the government's suggestion might work for other commodities, changing markets from the U.S. would prove to be too difficult.
"It would mean distributing to more than 200 countries, to be able to replace the 26.3 percent the U.S. holds," he said, adding that it would not be achievable in a short time.
Indra predicted that if the recession in the U.S. expanded to other countries, exports would decline by at least 25 percent next year, compared to US$2.2 billion in 2000.
To at least lower that number, the government must intensively promote Indonesia and Indonesian products, he said, adding that trade diplomacy between the nations should be aggressively carried out.
"It will not be easy," he said.
API had earlier predicted that more than 100,000 workers in the textile industry would loss their jobs next year due, in particular, to the shrinking U.S. market.
Exports have been the main engine of Indonesia's surprising 4.8 percent economic growth last year. With the expected decline in exports this year, some analysts doubt whether the government's 4 percent economic growth projection for next year could be met.