Indonesian exports ready to enter new era: trade minister

October 25, 2007 - 0:0

JAKARTA (AFP) -- Indonesia is set to enter the ""next stage"" of its export recovery, 10 years after the 1997 Asian financial crisis crushed its once-formidable export growth, the country's trade minister said.

In an interview with AFP this week as a major trade fair launched aiming to lure cashed-up buyers from abroad, minister Mari Pangestu said that the government was now focusing on seeking to boost non-commodity exports.
""My first priority (has) been to get us back to the level before the crisis and I think we've achieved that in terms of market share, in terms of the growth rate,"" Pangestu said.
Indonesia was one of the nation's worst hit by the 1997 crisis and has only just clawed its way back to recovery.
""The next stage: ... we have to ensure manufacturing exports will continue to increase. If you look at the numbers, actually the growth rate in the manufacturing sector in general hasn't been high,"" she said, referring to an annual growth rate of five to 10 percent in recent years.
Pangestu, an overseas-educated economist, said strong demand for Indonesian commodities had driven its exports past the milestone of 100 billion dollars a year. However, growth has been far slacker in non-commodity exports.
The result has been impressive growth in industries that employ few people, but far less in those with the potential to provide jobs to Indonesia's growing population of unemployed.
""We haven't seen the growth that we would have liked in the labor-intensive industries,"" Pangestu said, conceding that this was crucial to reducing poverty in the world's fourth most populous nation.
A March government estimate put the number of unemployed at 10.9 million, out of a total labor force of 105 million. Some 2.3 million more people are expected to seek jobs this year.
While there were some exceptions to Indonesia's lackluster export performance -- such as in consumer electronics -- exports such as textiles and footwear ""haven't really grown as much as we would have liked.""
Pangestu said Indonesia would try to improve the position of its manufacturing sector by attracting investment and pursuing labor reform.
She said the country had already been successful in its investment push but would not revise its labour laws ""in the near future"".
Attempts to revise laws last year led to massive protests in Jakarta and a backpedalling among legislators.
Pangestu said Indonesia would nevertheless attempt to tackle investor fears of high labor costs by introducing a system of retrenchment insurance for employers.
""The main issue companies complain about is the high cost of retrenchment compared to other countries,"" she said.
Figures from the trade ministry show Indonesia's total exports, including oil and gas, reached 73.35 billion dollars between January and August this year, a 13.35 percent jump on the same period a year ago.
Growth in non-oil and gas exports increased by 19 percent to 59.91 billion dollars from the same period in 2006.
Pangestu said Indonesia would aim for overall export growth of between 11 and 13 percent over the next two to three years.