JAKARTA (TheInsiderStories) – To tackle the trade deficit, Indonesian government is prioritizing the development of export-oriented industrial sectors, said the minister last week. Based on Statistic Indonesia data, the Southeast Asia biggest economy still experienced a trade deficit US$3.20 billion amid the poor export.
In December only, the deficit also dropped $0.03 billion from $1.07 billion in the same month of 2019. Export only grew 6.94 percent to $167.53 billion and import worth of $170.72 billion.
The highest contribution of exports came from mineral fuels reaching $22.22 billion or 14.35 percent of the total export portion and vegetable animal oil fats of $ 17.61 billion, equivalent to 11.37 percent.
While, imports in the opposite, raw materials or auxiliaries are the largest import component reaching $125.9 billion. Then, capital goods trailed by $28.41 billion, and consumer goods of $16.41 billion, the data showed.
To reducing the trade deficit, said the industry minister, Agus Gumiwang Kartasasmita in an official statement, the government will focusing on 15 sectors to boost the export performance.
The potential sectors are palm oil processing and its derivatives, food industry, paper industry and goods from paper, the crumb rubber industry, tires and rubber gloves, the wood industry and wood products, as well textile industry and textile products.
Furthermore, the footwear industry, cosmetics industry, soap, and cleaning materials, the vehicle industry four-wheel motorized, the electric cable industry, the pipe industry and iron pipe connections, the appliance industry agricultural machinery, the electronics consumption industry, the jewelry industry, and the handicraft industry.
“Some challenges that need to be addressed is maintaining the availability of raw materials and components, deepening industrial structure, optimizing the domestic content level, and continuing to drive the development of industrial zones including SMEs centers,” he noted.
Kartasasmita added, his ministry also tried to attract more investment in the industrial sector, especially the sector could produce import substitution products and implementing the industrial downstream policy. One strategic steps has been undertaken it the implementation of the mandatory biodiesel use of 30 percent also known B30.
According to him, this product could save foreign exchange cost $4.8 billion. Another step, the development of pharmaceutical research and development with a purpose to produce drugs for national needs.
Next, strengthen the PT Trans Pacific Petrochemical Indotama, a petrochemical producer, in order to reduce importing petrochemical products, so the country have ability to save foreign exchange spending up to $1 billion a year. Other plans, Kartasasmita said, develop coal gasification in Peranap and Tanjung Enim in South Sumatera to reduce dependency import of polypropylene and liquid petroleum gas.
Then, the development of horticulture to help the growth of capacity concentrate industry in the country and build green refinery in Plaju, South Sumatera, to produce green diesel. He told, the country also focused on stainless steel-based industries in Morowali, Central Sulawesi, in order to increase the value added of mineral raw materials in the country.
The government also encouraged the development of petrochemical industry in Cilegon and Merak, Banten. In addition, accelerated the development of petrochemical industrial estates in Bintuni Bay, West Papua, to reduce dependence on imported petrochemical products.
The minister reported, in 2019 the industrial sectors has export the processing products up to $126.57 billion, or contributed 75.5 percent of total Indonesian exports which touched $167.53 billion US dollars over the past year.
“We already have a road map for Making Indonesia 4.0, which is our strategy for preparing to enter the industry 4.0 era. Through this roadmap, we will also increase 10 percent of net export contributions on GDP,” he concluded.
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