Textile, timber exports projected to fall

Zakki Hakim, The Jakarta Post, Jakarta

Textile and timber exports would be the most badly affected by the ongoing war in Iraq, a senior official at the Ministry of Industry and Trade said on Friday.

The director general of foreign trade at the ministry, Sudar SA, said that textile and garment exports to the U.S. this year could decline by between 10 percent and 15 percent.

He did not give any estimate for timber products.

Textiles and timber are among of the country's main non-oil and gas exports. The U.S. is one of the primary export markets.

But Sudar said that the ministry was still calculating the real impact of the war on the country's export outlook. He added that the prospects would depend on how the war developed.

The country's export performance has been weakening over the past couple of years partly due to the economic slowdown in key export markets, such as the U.S. and Japan.

Many analysts have said that the Iraq war would further hurt the already weak global economy.

Exports are an important engine for economic growth. However, for the past couple of years growth here has been primarily driven by domestic consumption. Analysts have said that in order to achieve respectable economic growth figures, exports must be promoted further.

Sudar said that one measure to cope with the prospect of declining exports was to seek out new markets, such as Australia, Europe and Canada.

The country's textile exports reached about $7 billion last year, while timber product exports amounted to nearly $4 billion.

Elsewhere, Sudar said that some exports, such as footwear, would not be so badly affected by the war as the local industry could find alternative markets.

He added that rubber exports could even thrive as the price of this commodity increased in line with higher oil prices.

Meanwhile, Ministry of Finance spokesman Maurin Sitorus was quoted by detik.com as saying that the ministry was preparing a stimulus package to help local industry deal with shrinking overseas markets.

He did not provide details.

Maurin said that the government would also step up efforts to curb the smuggling of overseas products into the country so as to help local industry maintain its share of the domestic market.