RI needs to lure more export-oriented investors

JAKARTA. Indonesia needs to attract more export-oriented investors to help strengthen the country’s trade balance which has been under pressure due to lower export earnings during the past several months, a senior official has said.

“Around 70 to 80 percent of investors coming into Indonesia focus on the domestic market, while only 20 to 30 percent of them are export-oriented,” Deputy Trade Minister Bayu Krisnamurthi told reporters in his Jakarta office on Friday.

Bayu urged the Investment Coordinating Board (BKPM) to exert more effort to attract export-oriented investors to foster Indonesia’s exports and, therefore, ease the pressure on the country’s trade balance. “Actually, we expect Indonesia to become a production base [for manufacturing goods] so the proportion of exports in the economy can increase,” he added.

Exports account for 31 percent of the GDP of Indonesia, lower than domestic consumption which accounts for 50 percent. Indonesia’s exports are relatively small compared to its neighbors such as Singapore and Malaysia, whose exports account for 209 percent and 97 percent of their GDPs respectively, according to data from the World Bank.

The suggestion voiced by the Trade Ministry was in line with the BKPM plan to give more room for export-oriented investors.

“That’s right, we must balance domestic-oriented [investors] with the export-oriented ones,” BKPM chairman M. Chatib Basri wrote in a text message from London, United Kingdom on Friday.

Chatib recently unveiled his plan to attract more “smart investment” into the country, such as those focusing on exports and those expected to transfer technology to Indonesian workers.

The entry of export-oriented investments into the country was usually followed by their suppliers, which could bring a massive boon to Indonesia’s economy, the BKPM chairman said.

With more export-oriented investments realized in the country, the strong growth of investments will not burden Indonesia’s trade balance as there would be an increase of exports to compensate for the increase in imports of capital goods used to support new investments.

Indonesia’s monthly exports rose 13.2 percent in September to US$15.9 billion from the figure recorded in the previous month, bringing total exports in the January-September period to $143 billion, or 70 percent of the export target set by the government, the Central Statistics Agency (BPS) reported.

The government has set its yearly export target at $203 billion; a target which analysts say is unlikely to be achieved as the world’s economy has not shown any sign of a quick recovery that could boost Indonesia’s exports. The lower exports have undermined the country’s trade balance.

Bayu, however, brushed off concerns that Indonesia might not reach the target. “Our most pessimistic forecast shows that the $203 billion target is quire realistic. Our rough calculation indicates that [exports] may reach between $200 and $205 billion.” (The Jakarta Post)

Indonesia recorded its second consecutive monthly trade surplus in September after previously seeing trade deficits for four consecutive months from April. The trade surplus in September rose to $552.9 million from the $248.5 million it booked a month earlier, thanks to a slight rebound in exports during the month.