Economist: Indonesia`s foreign trade to continue to be in the red

Jakarta (ANTARA News) - An economist from Economics, Industry, Trade (Econit) said Indonesia will continue to suffer trade deficit due to problems in the export, consumption and investment structure.

The trade deficit which reached US$1.33 billion in the first 11 months of last year is a long term phenomenon, Econit Director Hendri Saparini said here on Tuesday.

"I see that the deficit is not a short term phenomenon but a long term one," Hendri said.

She said the models of investment and private consumption would continue to result in deficit in the country`s international trade.

Meanwhile, the government could not expect to see much improvement in exports which are 70 percent dominated by energy and raw materials.

"It is because we want to develop downstream industry. This mean a big cut in exports of raw materials and energy," she said.

Meanwhile, imports would continue to rise as growing investment would need a large supply of imported basic materials, she said.

"All investments are hungry for imports and emerging middle class would depend much on imported consumer goods," she added.

The trend, therefore, would continue and Bank Indonesia alone could hold it back from disrupting stability in exchange rate, interest rate and foreign exchange reserves, she said.

"The people and business people are waiting for the government to do something about it," she said.

She said raising the prices of subsidized oil fuels (BBM) is not a remedy as it would not touch the root of the problem.

"The government needs to find a solution that could root out the problem, the swelling consumption of subsidized BBM," she said.

Deputy Finance Minister Anny Ratnawati also attributed the country`s trade deficit to growing imports of capital goods and industrial basic materials needed by growing investment.

Anny said production of components of industrial basic materials should be encouraged to reduce dependence on imports.

"The growth of the manufacturing sector should be sustained with the availability of locally produced basic materials," she said.

Dependence on imports for industrial basic materials should be reduced, she said

In the first 11 months of 2012, the country suffered a trade deficit with imports valued at US$176.09 billion exceeding exports of only US$174.76 billion.

The finance ministry estimated that the country had a surplus of US$3.07 billion with current account deficit at US$5.4 billion in the last quarter of 2012.

(AS/S012) 

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