Value of non-oil and gas exports expected to drop 15%

Value of non-oil and gas exports expected to drop 15%

JAKARTA (JP): The Association of Indonesian Exporters (GPEI)
has estimated a 15 percent drop in the value of the country's
non-oil and gas exports this year due a deterioration in the
country's key economic indicators.

"In terms of volume, the drop in country's non-oil and gas
exports could reach 50 percent in 1999," the association said in
an assessment report.

GPEI attributed the estimated sharp drop in non-oil exports to
a worsening of the country's economic indicators, which were
exacerbated by a delay in the disbursement of international loans
to the country.

The association said the delay in the disbursement of the
International Monetary Fund (IMF) bailout package and the World
Bank's loan not only hurt the liquidity of the country's payment
system, but also the country's risk and sovereign ratings.

The IMF and World Bank suspended loans to Indonesia last month
because the government refused to release a full report of the
audit result on the high-profile Bank Bali scandal, which
allegedly involved close aides of President B.J. Habibie.

The association said the country's poor ratings reflected
continued uncertainty in the economy, and the government's
inability to restore the ailing business climate.

The lack of confidence had also harmed business transactions
with overseas partners, the association said. "The reluctance of
foreign banks to accept letters of credit from Indonesian banks
hurts exporters, because they face difficulties in financing
imports of their raw materials," he said.

According to the GPEI data, the value of Indonesia's exports
and imports during January and August of this year fell by
respectively 8.18 percent and 13.23 percent.

"In terms of volume, Indonesia's exports during the period
dropped by 47.2 percent," the association said, adding that the
exports were lower in terms of value due to an increase in the
price of most non-oil and gas commodities.

In the period from January to August this year, Indonesia's
import of non-oil commodities declined by 16.13 percent, a figure
which however was still well above the 34.62 percent decline
recorded in the same period last year.

In the same period last year the value of non-oil and gas
exports dropped by 10.91 percent, resulting in a decline in its
contribution to the country's total exports of 81.53 percent,
from 83.88 percent in the corresponding period in 1998.

Indonesia's exports of non-oil commodities reached US$40.97
billion in 1998, a figure lower than 1997's record of $41.82
billion, but higher than 1996's record of $38.09 billion, he
said.

Japan remained the largest market for Indonesian exports
during from 1981 to 1998. The value of Indonesia's total exports
to Japan during the period amounted to $184.45 billion.

"The second largest market for Indonesian export during the
period was the United States, followed by Singapore, the
Netherlands and Hong Kong," said GPEI chairman Benny Soetrisno.

Data from the association showed Indonesia exported goods
worth a total of $83.64 billion in value to the United States
from 1981 to 1998, $53.71 billion to Singapore, $15.43 billion to
the Netherlands and $14.21 billion to Hong Kong.

The sixth largest market for Indonesian goods during the
period was Germany with total export values amounting to $13.70
billion, followed by Australia with $11.33 billion, Britain with
$10.71 billion, Malaysia with $8.31 billion and Italy with $7.25
billion.

Benny said the poor ratings given to Indonesia, such as
country risk and insurance ratings of E-46 and E-20 respectively
for the political and economic sectors clearly indicated
Indonesia's poor performance in the eyes of the international
trade and investment community.

He said to solve the problems Indonesia should gradually stop
its dependency on foreign loans by increasing its export capacity
and promoting its tourist sector in order to gain foreign
exchange. (cst)