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Summary:
Ø
Indonesia’s non oil and gas
exports increased 18.7 percent in the first ten months of 2005
compared to the same period in 2004, with machinery and
electrical tools, fats and palm oils, and coal the leading
export categories.
Ø
According to Central the
Statistic Agency (BPS), U.S.-Indonesia bilateral trade reached a
record USD 11.9 billion in 2004.
Ø
The Investment Coordinating
Board (BKPM) reported that foreign direct investment (FDI)
approvals reached USD 11.2 billion for the first ten months of
2005, an increase of 22 percent year-on-year (YoY).
Ø
President Susilo Bambang
Yudhoyono issued a Presidential Regulation on November 9
governing risk-sharing and public-private partnerships for
infrastructure projects.
Ø
Minister of Industry Andung
Nitimiharja admitted that textile and garments were being
transshipped through Indonesia on November 18.
Ø
President Yudhoyono issued a
Government regulation on October 25 increasing sales tax
on luxury cars.
Ø
Korean companies told President
Yudhoyono that they are
seeking strategic investment projects in Indonesia’s
infrastructure sector.
This report uses the
November 30 closing rate of Rp 10,035/USD for all calculations.
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Exports Continue Growth
The Central Statistics Office (BPS) announced on December 1 that Indonesia's exports
reached USD 70.3 billion for the first ten months of 2005, an increase of 19.5 percent year-on-year
(YoY). However, YoY export growth rates slowed during 2005 from 30 percent in January to 19 percent
in October, and BPS expects export growth may drop to 15 percent by December 2005. Non-oil and
gas exports accounted for USD 54.5 billion of the ten-month total, a YoY increase of 18.7 percent.
Meanwhile, January through October 2005 imports grew to USD 48.6 billion, a 29.1 percent increase
YoY. Overall, Indonesia's trade surplus reached USD 21.7 billion for the first 10 months of 2005, a 2.4
percent increase YoY.
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Table 1: Indonesian Trade Performance:
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January to October 2005 (in USD billions)
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Jan-Oct
2004
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Jan-Oct
2005
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Percent
Increase 2005/2004
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|
|
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Exports
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58.8
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70.3
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19.5
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Oil and Gas
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12.9
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15.8
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22.2
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Non-oil and Gas
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45.9
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54.5
|
18.7
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Agricultural
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2.0
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2.6
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25.5
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|
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Industrial
|
40.4
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45.8
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13.5
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Mining and others
|
3.5
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6.1
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75.8
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|
|
|
|
|
|
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Imports
|
37.6
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48.6
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29.1
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Oil and Gas
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9.3
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14.8
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58.6
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Non-oil and Gas
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28.3
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33.8
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19.4
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Balance
of Trade
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21.2
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21.7
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2.4
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Imports by Broad Economic Categories:
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Imports
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37.6
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48.6
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29.1
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Consumtion Goods
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3.1
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3.8
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20.9
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Raw Materials
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29.4
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37.9
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29.2
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Capital Goods
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5.2
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6.9
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33.7
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Industrial exports, which account for 65.2 percent of total exports, expanded 13.5 percent
YoY to USD 45.8 billion from January through October. Machinery and electrical tools, fats and
palm oils, and coal were Indonesia's top three non-oil and gas exports for the period, comprising
11.2, 7.2 and 6.6 percent respectively. The United States took over in October as Indonesia’s largest
export destination in 2005, followed by Japan and Singapore.
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January to October 2005 (in USD billions)
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Jan-Oct
2004
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Jan-Oct
2005
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Percent
of Total
Jan-Oct 05
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Machinery/Electrical Tools
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5.6
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6.1
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11.2
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Fats and Palm Oils
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3.5
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3.9
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7.2
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Coal
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2.2
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3.6
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6.6
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Rubber and Rubber Products
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2.5
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2.8
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5.2
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Garment – not Knitted
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2.4
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2.6
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4.8
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Wood and Wood Products
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2.7
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2.6
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4.8
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Copper, Ash and Residues
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1.3
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2.5
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4.7
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Paper/Cardboard Paper
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1.8
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1.9
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3.4
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Non-Organic Chemical
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1.2
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1.3
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2.4
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Fisheries and Shrimps
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1.2
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1.3
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2.3
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Table 3: Indonesia: Main Non-Oil and Gas Export Destinations,
January to October 2005 (FOB
value, in USD billions)______________________
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Country
of Destination
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Jan-Oct
2004
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Jan-Oct
2005
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Percent
of Total (2005)
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USA
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6.9
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8.0
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14.7
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Japan
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6.9
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7.9
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14.6
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Singapore
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4.4
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5.8
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10.7
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China
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2.9
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3.2
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5.9
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Malaysia
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2.4
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2.7
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4.9
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South Korea
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1.5
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2.1
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3.8
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European Union
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7.4
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8.3
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15.2
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Taiwan
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1.2
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1.5
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2.6
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Australia
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0.9
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0.9
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1.7
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Others
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11.4
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14.1
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25.7
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Total
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45.9
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54.5
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100
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Source: Central Statistic Agency (BPS)
Separately, BPS also released its U.S. and Indonesia bilateral
trade data from 2001 to 2005 (for 2005, January through June only).
According to BPS statistics, the peak bilateral trade year by
volume was 2004 at USD 11.9 billion, with Indonesian exports to the
U.S. accounting for USD 8.7 billion and U.S. exports to Indonesia
accounting for USD 3.2 billion. Based
on the first six-months total for 2005, however, U.S.-Indonesia
bilateral trade is on track to top 2004 figures.
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Table
4: U.S.-Indonesia Balance of Trade 2001-05 (USD billion)
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Year
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Exports
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Imports
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Balance
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Total
Trade
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2001
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7.4
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3.2
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4.2
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10.6
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2002
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7.6
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2.6
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5.0
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10.2
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2003
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7.4
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2.7
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4.7
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10.1
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2004
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8.7
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3.2
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5.5
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11.9
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2005
(Jan-Jun)
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4.8
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1.9
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2.7
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6.7
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Garments and footwear, natural rubbers, furniture and sound
electronics were Indonesia’s leading exports to the U.S. for the
first six months of 2005. Garments
and sound electronics showed the strongest growth, while Indonesia’s
petroleum and crude oil exports to the U.S. dropped significantly -- a
reflection of steady declines in Indonesia’s production capacity and
its new status as a net oil importer.
Meanwhile, Cocoa, oil seeds and construction equipment and
parts were leading U.S. exports to Indonesia.
Exports of construction machinery and materials demonstrated
good growth, a reflection of increased investment in the economy.
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Tabel
5: Leading Indonesian Export to the U.S.
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2004
- 05 (in USD millions)
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STNC
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COMMODITIES
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2004
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2005
(Jan - Jun)
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034
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Fish, Fresh or Frozen
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81.5
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47.6
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036
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Crustaceans/mollusks/aquatic invert
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314.8
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158.2
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037
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Fish, crustacean, mollusks and other
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aquatic
invert., prepared/presetrved
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126.7
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70.1
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072
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Cocoa
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163.7
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78.2
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231
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Natural rubber latex, natural rubber and
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similar natural gas
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738.0
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404.5
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333
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Petrolium oil, crude
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430.4
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107.0
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334
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Petroleum products, refined
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64.6
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25.4
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634
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Veneers, plywood improved or reconstituted
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wood
worked
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58.2
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52.8
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635
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Woods manufactures
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173.8
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92.3
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642
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Paper and paperboard cut to size or shape
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and
article of paper
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68.3
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31.9
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752
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Automatic data processing machine and
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units
thereof
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368.5
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153.2
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763
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Sound recorder or reproducers
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486.3
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315.1
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821
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Furniture and parts thereof
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482.8
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289.0
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842
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Women's coat, jacket - not knitted
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853.6
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500.5
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851
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Footwear
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468.7
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251.9
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Source:
BPS
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Tabel
6: Leading Indonesian Import from the U.S.
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2004
- 05 (in USD millions)
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STNC
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COMMODITIES
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2004
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2005
(Jan - Jun)
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041
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Wheat and meslin unmilled
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23.0
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11.9
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057
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Fruit or nut, fresh or dried
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38.6
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9.3
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081
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Feeding stuffs for animals
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141.9
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93.7
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222
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Oil seeds used for extraction of soft fixed
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vegetables
oils
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329.0
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130.0
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263
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Cacao
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222.9
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141.4
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511
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Hydrocarbon NES (not selsewhere stated)
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and
their halogenated, netrated and derivatieves
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52.9
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8.6
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523
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Metallic salts and peroxy salts
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62.0
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35.5
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551
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Essential oils, perfume and flavor materials
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16.9
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6.5
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598
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Miscellaneous chemical products NES
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(not
elsewhere stated)
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66.9
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33.6
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641
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Paper and paperboard
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32.6
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17.9
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651
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Textile yarn
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49.3
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22.0
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679
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Tubes, pipes, hollow profile, pipe fittings
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of
iron or steel
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36.3
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29.0
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713
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Internal combustion piston and engines/parts
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30.7
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20.9
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723
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Civil engineering/cotractor plant/equipment/part
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143.6
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107.1
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764
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Tellecommunication equipment NES and parts
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52.1
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24.6
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Source: BPS
Investment Approvals Rise
According to the BKPM, foreign investment approvals rose to USD
11.2 billion from January through October 2005, an increase 22 percent
from USD 9.2 billion for the same period in 2004.
Meanwhile, domestic investment approvals from January to
October 2005 also rose to Rp 44 trillion (USD 4.38 billion) from Rp
36.3 trillion (USD 3.62 billion), a 23 percent increase YoY.
Transportation, warehousing, communications and chemicals were
the sectors that attracted the greater investor interest during the
period. Indonesia’s Investment Coordinating Board
(BKPM) divides its investment data into three categories: new
projects, project expansions and changes in project status.
The first two categories, where most growth has occurred, are
those most likely to generate fresh economic activity, while the
"change of status" component is more of a legal issue.
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Table
7: Investment Approvals January-October 2005
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(USD
billions)
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Foreign
Investment
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Domestic
Investment
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2004
|
2005
|
2004
|
2005
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New Projects
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4.2
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5.2
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3.0
|
2.4
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Project Expansion
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5.2
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2.7
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1.3
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0.8
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Change of Status
|
1.8
|
1.3
|
0.07
|
0.4
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Total
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11.2
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9.2
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4.4
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3.6
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Source:
BKPM
Risk
Sharing Decree on Public-Private Partnerships
The GOI issued a Presidential Regulation (No.67/2005) on
November 9 governing public-private partnerships for infrastructure
development. The
regulation is aimed at boosting infrastructure investment and
development to spur economic growth and creating jobs, while
protecting the interests of consumers and public and private
investors. Under the new
regulations, the government will share some investment risks of
infrastructure projects, in particular sovereign risk.
The Ministry of Finance has established a Risk Management
Committee for Infrastructure Provision that will oversee the
management of these risks. The
new risk guarantees are intended to assist investors’ efforts to
secure capital from banks, many of which still consider multi-year
infrastructure projects in Indonesia as high risk.
The new regulation also establishes mechanisms for setting
tariffs for self-financing projects, such as toll roads and railways.
The regulations call for automatic adjustments to tariffs every
two years that are based on the rate of inflation.
Previously, tariff adjustments required parliamentary approval,
which caused significant delays and added to uncertainty.
In January 2005, the GOI announced it would tender 91
infrastructure projects worth roughly $22.5 billion, with more
projects in the pipeline. However,
legal uncertainties, such as rules for establishing tariffs and land
rights, have slowed the tendering process.
GOI
Calls for Halt to Textile Transshipments
Minister of Industry Andung Nitimiharja on November 18 called
for a halt to textile and garment transshipments through Indonesia.
Andung admitted that transshipments were occurring and that a
coordinated interagency effort was needed to stop these practices.
According to the Minister, the majority of transshipped
products are Chinese textiles and garments passing through Indonesia
to the United States and European countries under fictitious
certificates of origin. Andung
said he planned to discuss the matter further with all Indonesian
textile and garment producers, including those originating from China.
(Note: Drs. Fahmi
Idris left his position as Minister of Labor on December 7 and
replaced Andung as Minister of Industry on December 7.)
GOI
Increases Sales Tax on Luxury Cars
The GOI issued Government Regulation 41/2005 on October 25
increasing the sales tax on cars with engine capacities above 1,500
cc. The new regulation
increases sales tax on sedans with engine capacities between 1,500 and
3,000 cc from 40 percent to 50 percent; sales tax on multi-purpose
vehicles (MPV) with engine capacities between 1,500 cc and 2,500 cc
from 5 percent to 25 percent; and sales tax on petroleum-fueled cars
with engine capacities between 2,500 cc and 3,000 cc from 10 percent
to 50 percent. The
Ministry of Finance's Team Tariff is currently drafting implementing
regulations for the regulation.
The Indonesian Automotives Industry Association (Gaikindo) has
urged the GOI to reconsider the tax increases, claiming that they will
further harm the current weak local automotive industry sales.
According to Gaikindo Chairman Bambang Trisulo, the automotive
industry is already contending with a number of adverse economic
factors, including greater foreign competition and recent dramatic
fuel price hikes.
Korean
Companies Discuss Investing in Indonesia
President Susilo Bambang Yudhoyono on November 22 announced
that South Korean companies were seeking strategic investment projects
in Indonesia. Representatives
of leading Korean companies including the Korea Electric Power
Corporation (Kepco), Korea Highway Corporation (KHC), Korindo Group
and SK Corporation met the President in Busan during the recent
November APEC meetings. They
appear most interested in investing in the oil refining,
telecommunications, power plant and toll road sectors.
President Director Widya Purnama of state-owned oil company
Pertamina noted that SK Corporation was seeking to establish an oil
refining joint venture with Pertamina worth USD 150 million.
SK Corporation reportedly is also seeking a joint venture with
state-owned telecommunications company PT Telkom to develop code
division multiple access (CDMA) for cellular phones.
Furthermore, Kepco is seeking to develop power plants, and KHC
is expected to participate in a toll road tender connecting Bandung
and Cirebon in West Java. Representatives of the four Korean companies said they plan
to visit Indonesia in the near future to further discuss their
investment plans.
***
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