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Indonesia Trade News Official Blog


An official Invisindo's blog


Balance of Trade and The Curse of Import

Trade Deficit (Hit the Record Breaking of All Time)
In the first half of 2013, Indonesia faced serious deficit that even hit the record breaking of USD 5.65 billion. Cumulatively from January - June 2013, total exports from Indonesia were USD 106.18 billion or declined 6.07% compared to same period in 2012. For non oil & gas sector, total exports from Indonesia were USD 87.57 billion, decline 2.66% compared to same period in 2012. 
On the other side, import products into Indonesia has become a nightmare to Indonesia's balance of trade. Total value of USD 17.42 billion from worldwide, rose 11.4% if compared to June 2013 and 6.5% compared to same period in 2012. Until July 2013, three main export destinations for non oil & gas products known as China (USD 1.69 billion), Japan (USD 1.39 billion) and USA (USD 1.49 billion), these three countries contributed 35.57% to Indonesia's export of non oil and gas.
Indonesia is still luckily enjoying economic growth of 5.81% until second quarter of 2013, where mainly manufacturing, trading, tourism, logistics and telecommunication seem to be the main backbone to this positive growth, whilst mining industry remains stuck in the dark age over the last two years. 
Source: Indonesia's Statistics

Indonesia's economic is driven by local consumption, product export and investment
In terms of growth rate of expenditure, public consumption, investment and export of product and services set as the main driver to Indonesia's economic growth rate totaling of 5.81%. Despite of the volatility of Rupiah to other foreign currencies including USD which also caused huge withdrawal of cash from the stock market and slumped the stock index to below 4,100.  
Source: Indonesia's Statistics
Contribution of local consumption itself was 48% to economy growth. In sense of massive population of 245 million people, Indonesia's economy is highly dependent with local consumption and that seem to be the most logic reasons to say that the raise of middle income people would contribute even higher growth in the future. 
Import Issues
When the Indonesia's government decided to raise the subsidized fuel price from USD 0.45 / liter to USD 0.65 / liter, it was expected the volume consumption could be decreased, yet in the other way around, fuel import in July 2013 rose 17.17% compared to June 2013 or equivalent to USD 4.14 billion. 
Along with the US Federal Bank's policy that caused serious impact in developing countries especially country like India, Thailand and Indonesia where each central bank had to increase the rate as part of the country's monetary policies and is expected to reduce volatility of the stock market. 
With total trade deficit of USD 5.65 billion, Indonesia's government was overwhelming with the situation in order to overcome the trade deficit. Cumulatively from January - July 2013, total imports into Indonesia's market were amounting USD 111.83 billion, while total exports for the same period were amounting USD 106.18 billion. 
Source: Indonesia's Statistics
For non oil & gas, export from Indonesia remains high, where commodities such mineral fuel, machinery, rubber based products and other mining products such as metal, tin, steel as well as fertilizer led the Indonesia's top 10 exported products. For import, mechanical and electrical machinery / equipment including mobile phone, steel, motor vehicle, plastic, organic chemicals and others led the Indonesia's top 10 imported products. 
Source: Indonesia's Statistics

Hedonism and Consumerism
As previously mentioned, the Indonesia's mid power consumer group totaling 45 million people play an important role to Indonesia's economy. And not by surprise to say that Jakarta as a capital of Indonesia has more than 170 shopping malls which is the biggest in the world if compared to other cities. Lifestyle and purchasing power have somehow driven the Indonesia's consumer to adopt consumerism as a lifestyle. 

This credo has become a strong point especially for retail market in Indonesia. Indonesia's statistics recorded that import of cellular phone represent the largest import of non oil & gas products amounting USD 1.2 billion during period January - June 2013. Compared to last year in 2012, total import value of cellular phone was USD 2.6 billion. 

No wonder if Indonesia's targeted as the most emerging nations in South East Asia, not only by total population of 245 million people, yet the rise of mid power consumer groups totaling 45 million people and would hit 135 million people by 2030 seem to be the main reason to global vendors. 

As the global trend of having low cost car is trending, Indonesia government, endorsed through Government's Regulation No. 41 Year 2013 pertaining Low Cost Green Car (LCGC) and Low Emission Program has officially signed by Indonesia's president. To stimulate the investors from automotive sector, an incentive was given which exempted this product from luxury tax (PPnBm). 


Popular known as cheap car which is offered with the price of USD 7,500 -  USD 12,000, car producers are targeting medium class group. One of the concept of LCGC is the requirement of having fuel saving consumption which require at least 20km per liter. Despite of having renewable energy as the most ideal concept of having a green car such as gas or electricity car, still car producers have met at least with the criteria of having low cost green car concept. 

This LCGC would consume fossil fuel just like "regular" cars and would enjoy fuel subsidized by the government. Pro and Contrast of this program have become a trending topic for the last few days, some say buyers of this cars would still come from existing car owner, others complained that these cars will cause nothing but traffic only and lastly, the local government of Jakarta for sure will overcome the impact of this LCGC through implementation of ERP system, odd and even plate system and for sure raising the parking fee. In the end, local government's effort to drive and persuade public to utilize public transportation would be questioned again the effectiveness to reduce traffic congestion. 

Further information about trade news and information in Indonesia, please visit regularly. 

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