Trade and economic ties of France, RI weather changes
Trade and economic ties of France, RI weather changes
Trade between France and Indonesia has grown steadily over the past decade and reached a peak of 14.7 billion French francs (FF) in 1997 (US$2.5 billion), when French exports were boosted by the delivery of four Airbus A330 to Garuda. The slowdown, and then the recession of Indonesia's economy as a result of the Asian crisis had dramatic consequences on trade relations with all its major partners. Indonesia's total imports fell 34.4 percent in 1998, from $41.7 billion to $27.3 billion. Its trade surplus with the rest of the world soared from $6.9 billion in 1996 to $11.8 billion in 1997, and $21.5 in 1998.
In this context, the pattern of bilateral trade relations between France and Indonesia recorded a major shift in 1998. French exports in Indonesia dropped by 71.3 percent compared to 1997 (59.6 percent excluding aircraft), while Indonesian exports to France increased by a healthy 9 percent to reach a historic peak of FF 6,571 million. Indonesia benefited from a strong depreciation of the rupiah and from the growth of the French economy, translating into a stronger demand for imported goods.
In the span of one year, the trade balance between France and Indonesia went from a surplus of FF 2,658 million in favor of France to a deficit of FF 4,075 million, which ranks 11th in the classification of France's bilateral trade deficits (and fourth in Asia after Japan, China and Malaysia).
In 1998, Indonesia was ranked Frances 56th customer, with a trade flow representing 0.14 percent of France's total exports, and its 33rd supplier, providing 0.39 percent of France's total imports.
French exports to Indonesia are highly diversified, and concentrate for the most part in industrial goods. France's main exports to Indonesia are electrical equipment, electronics, telecommunications equipment, machinery, chemicals, automotive components, steel tubes, pharmaceuticals, food and agricultural products.
Indonesian exports to France are concentrated on a smaller number of products, particularly shoes, textiles and garments, plywood, rubber, consumer electronics, furniture, toys, coffee and cocoa. Textile and garments are Indonesia's main exports to France, and represent 26 percent of total exports, followed by food products, 17 percent, shoes, 14 percent, furniture, 14 percent, and consumer electronics, 13 percent.
Although bilateral trade figures will remain well below their potential level till Indonesia's economy recovers, they are expected to catch up strongly afterward. During the crisis, French investment in Indonesia has proved resilient, and only a very limited number of French companies have closed their subsidiaries, generally representative offices that can be reactivated when the economy picks up. French investors in Indonesia are, generally, large companies, with resources to weather the crisis, and a long-term vision of their presence in the country. Some have even intensified their efforts during the crisis, notably in the distribution and water sectors. Others are evaluating investment opportunities offered by a privatization program and the restructuring of Indonesian conglomerates.
Table: France-Indonesia Bilateral Trade (in million FF)
French Exports Indonesian Exports
Year to Indonesia to France Trade Balance
---------------------------------------------------------
1990 2,819 2,940 -121
1991 3,728 3,617 +111
1992 6,619 4,265 +2,354
1993 4,549 4,582 -33
1994 4,169 4,472 -303
1995 5,173 4,537 +636
1996 6,513 5,148 +1,365
1997 8,685 6,027 +2,658
1998 2,496 6,571 -4,075
Source: French Customs