Coordinating Minister for Economic Affairs (CMEA) Darmin Nasution Rated that Indonesian Economy Continue to Slow This Year - Photo by TheInsiderStories

JAKARTA (TheInsiderStories) – Coordinating Minister for Economic Affairs (CMEA) Darmin Nasution rated that Indonesia’ economy will continue to slow this year amid trade war, Brexit disputes, the issue of the Korean Peninsula and Middle East. This year, the Government expect the economy grow 5.3 percent.

Although it didn’t have a direct impact on Indonesia, he said, the tension disrupted the performance of Indonesia’s exports to the main export destination countries such as China, United States, India, Japan and the European Union (EU).

Nasution assessed that Indonesia’ trade deficit last year was caused more by excessive imports of goods, while export were slowly. According to him, high imports are a result of the unavailability of basic commodities needed, especially the iron and steel industry and their derivatives.

He suspects that there are some parties who deliberately boosted imports, especially during the period of Joko Widodo’ administration. The peak, the minister urged in 2017-2018 Indonesia got an oil and gas deficit.

“Maybe there are things we do secretly that have not encouraged exports. Therefore, we must continue to encourage exports, whether short or long term,” said Nasution.

He acknowledged, one of the things that made economic growth slow were the complicated and long logistical structure between regions, especially agricultural products, so that logistical costs became very expensive. He proposed, the government immediately adopt the work structure of companies such as retail supermarket Indomaret and Alfamart that apply the same cost structure in each region.

In the same stance, Chairman of National Development Planning Agency Bambang Brojonegoro, stated that to increase government exports also need to pay attention to the value and complexity of goods in order to compete and have a high bargaining power on global trade.

“The complexity of our exports is still low. Even though exports appear to be rising, they are not sustainable and consistent,” he said at the meeting.

Brodjonegoro considered, after the 1988 monetary crisis, Indonesia’ manufacturing industry grew insignificantly, instead tended to fall and was not yet a government priority. Last year it only grew below 20 percent.

He gave an example, in the 1990s industries such as textiles, electronics and shoes and other labour-intensive industries became the leading sectors of the Indonesian economy. The minister added, “After 1998, Indonesia was supported by the commodity boom, namely coal and oil palm.”

In 2018, the market share of manufacturing exports (to total exports) was only 46 percent of the target of the Medium-Term Development Plan of 57 percent. Although the market share of consumer goods for total imports is relatively small, its growth has continued to decline over the past three years.

While, Minister of Trade Enggartiasto Lukita said the Government committed to face various global and domestic challenges that have affected current trade performance. He stressed that the country had targeted trade performance this year by keeping the inflation rate at 3.5 percent, increasing the growth of non-oil exports by 7.5 percent, and building or revitalizing 1.037 people’s markets.

So far, Lukita said, in order to be superior and globally competitive, the government needs to increased value-added products and raise the trade competitiveness through optimizing trade distribution, digital economy, and developing integrated foreign trade.

He revealed, the industrial selection was an important key for increasing exports of value-added products. At present Indonesia is still dependent on exports of agricultural and plantation commodities (palm oil) and mining (coal) which provide little value-added.

Written by Daniel Deha, Email: daniel@theinsiderstories.com

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