Wed, 02 Jul 2003

Unharmed by firmer rupiah, five-month exports rise 11.7%

Evi Mariani and Dadan Wijaksana, The Jakarta Post, Jakarta

Despite the rupiah's strong showing since the start of the year, Indonesia still posted a 11.66 percent rise in exports in the January-May period compared to the same period last year, the Central Statistics Agency (BPS) reported.

Exports in the first five months of the year reached US$24.9 billion against $22.36 billion a year earlier, with non-oil and gas exports rising to $19.12 billion from $17.68 billion, BPS director Soedarti Surbakti told a media briefing on Tuesday.

Exports of machinery and electrical equipment were the biggest contributors to overall non-oil and gas exports (contributing 13 percent), while timber and timber-based products came in second at 6.4 percent. The two categories respectively recorded $2.5 billion and $1.2 billion in total sales during the January-May period.

The rupiah has appreciated by 8 percent against the U.S. dollar since the start of this year. This has raised fears that it would make Indonesian exports less competitive against exports from peer countries whose currencies have not appreciated as rapidly as the rupiah.

Appearing to confirm this, Soedarti said: "For the first five months of the year, exports performed relatively well. However, May's exports experienced a decline."

Weighed down by lower oil and gas exports, the country's exports in May declined by 1.62 percent compared to April, offsetting a rise in non-oil and gas exports posted during the same period.

The BPS said Indonesia's May exports stood at US$4.92 billion, lower than the $5 billion posted the month before, despite a 1.03 percent rise in non-oil and gas exports from $3.8 billion in April to $3.92 billion in May.

Oil and gas exports in May were recorded at $1 billion, a 10.7 percent drop as against $1.1 billion posted in April.

The price of Indonesian crude oil on the global market fell 3.3 percent in May to $26.51 per barrel, down from $27.41 previously.

"Oil prices have significantly impacted on the overall figures because currently oil and gas sales make up between 23.4 and 24 percent of overall national exports," Soedarti said.

Meanwhile, imports for the first five months increased to $13.93 billion from $11.51 billion a year earlier, with non-oil and gas imports rising to $10.83 billion from $9.0 billion previously.

In May, imports also grew by 6.7 percent to $2.87 billion from $2.69 billion in April, bringing the country's trade surplus during the month to $2.05 billion, down from the $2.31 billion posted in April.

The trade surplus, or net exports, contributes around 9 percent to the nation's gross domestic product (GDP), with investment and domestic consumption being the other growth engines in the economy.

However, while their contribution is limited, a good export showing is good for the economy as high export sales mean more jobs as exporters expand capacity to meet rising demand.

Since most exporters use imported raw materials for their products, a rise in imports also often indicates a higher demand for exports.