Revive Exports

KOMPAS/PANDU WIYOGA

A container was unloaded from a transport ship that docked at Batu Ampar Cargo Port, Batam City, Riau Islands, on Wednesday (11/3/2020).

Despite the trade surplus, overall exports declined in May due to Covid-19. Comparative advantage needs to be utilized to promote trade.

Statistics Indonesia (BPS) reported on Monday that there was a surplus in the trade balance in May, although exports fell 28.95 percent year-on-year (yoy) and dropped 13.4 percent month-on-month. The biggest fall (21.02 percent) was recorded by the mining sector, while exports of agricultural products grew by 5.63 percent.

The trade surplus occurred because oil and gas and non-oil and gas imports fell by 42.2 percent yoy. The fall in non-oil and gas imports occurred in machinery and mechanical equipment. The decline in trade caused by the Covid-19 pandemic had been expected. Spending and economic activities had declines worldwide. In addition, countries also limited imports or exports to protect people’s health and domestic products.

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The trade surplus should be used as an opportunity to increase exports. The decline must be evaluated.

Trade is a source of global economic growth. However, even before the pandemic, there was a rise in protectionism. The most striking example is the trade war between the United States and China. Before the pandemic, the fall in global trade had not really affected Indonesia because it was not a main player in the global supply chains. We are still developing our domestic industries to get high added value from global trade supply chains.

KOMPAS/TOTOK WIJAYANTO

Officers clean the glass wall that reflects the monitor screen that displays the movement of stock price indexes on the Indonesia Stock Exchange, Jakarta, on Thursday (19/5/2020)

The Covid-19 pandemic brought about fundamental changes in many areas of life. Not only reducing the demand for goods and services globally, Covid-19 is also believed to encourage people to make local businesses or to serve a limited area to avoid contracting the virus. The change in behavior may persist even after a vaccine is found.

The pandemic effect must be an opportunity to promote our trade products at home and abroad. When all countries reset their strategies in facing the new normal due to Covid-19, we must also review our trade policies.

The data should relate to production activities based on our comparative advantage, requirements set by trading partners and changes in lifestyle post-epidemic.

We must have sufficient data on the trade chain, which should be collected accurately and appropriately based on science. The data should relate to production activities based on our comparative advantage, requirements set by trading partners and changes in lifestyle post-epidemic.

From the science-based data collection, we can compile a map of comparative advantages, for example based on commodities, regions, labor, technology mastery and export destinations.

Now is the time for us to have precise and anticipatory strategies and policies. Only with such an approach can we gain sustainable benefits from trade.