Sustainable and Competitive Exports

KOMPAS/AGUS SUSANTO

Aerial photo of import-export activities at the Jakarta International Container Terminal (JICT), North Jakarta, Wednesday (16/6/2021).

Indonesia’s exports showed a significant increase on a yearly basis in May but suffered a decline on a monthly basis. The monthly drop should, therefore, be monitored.

Oil and gas, and non-oil and gas exports reached a total of US$16.6 billion in May 2021, a 58.76 percent increase compared to the same month last year, although they fell from April 2021. The highest increase came from exports in the processing industry. Meanwhile, imports reached $14.23 billion in May, a 68.68 percent increase compared the same period in 2020, but imports suffered a decline from the previous month.

The export-import performance this year recorded several important things, including the trade surplus that has continued to show an increase since last year. The increase in imports of raw materials and auxiliary materials indicates that domestic industrial activities continue to move positively. Exports in May were dominated by products in the processing industry and were the highest compared to those of oil and gas, agricultural products and mining.

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The increase in the proportion of exports of industrial products at the same time showed a shift in our exports from primary commodities. This can prevent us from the sharp fluctuation in primary commodity prices.

However, in the midst of improving export performance, we still need to be aware of the declining value and volume of some exported goods. In terms of value and volume, the highest decline occurred in the export of vehicles and their parts, followed by rubber and processed rubber, as well as machinery and electrical equipment.

KOMPAS/RADITYA HELABUMI

Officers inspect piles of canned pineapples before they are put into containers at the Packaging and Labeling Department of PT Great Giant Pinneaple (GGP), Central Lampung, Lampung, Wednesday (16/5/2021). PT GGP\'s canned pineapple products are exported to 55 countries in a number of continents such as Europe, America and Asia.

Learning from experience, the government’s efforts to further increase exports of processed primary commodities and processed non-mining products must continue.

Now is the time for us to reorganize our industrialization and trade strategy. We need to shift from a broad base industry strategy and focus on a specific industry that has a sustainable and comparative advantage so that we can compete with other countries. The push to further expand the downstream industry should be also continued to achieve a competitive advantage and maximize the benefits of our resources.

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With its wet tropical climate, Indonesia has many resources that provide comparative and competitive advantages, namely agriculture, forestry and marine. The abundant workforce gives advantages to jobs that require hands-on skills, such as cultivating and picking coffee beans and making jewelry with a touch of art. Both are export commodities which, if developed, can create an added value to the product.

We want our economic growth to be inclusive so that, among other things, the value addition resulting from the processing industries as well as their exports can benefit many people. Our industrial and trade development strategy must also integrate workers and initial landowners as beneficiaries the development. Thus, the people who have been evicted from land used for mining or oil palm plantations can also enjoy a sustainable and prosperous life, including their children and grandchildren.

This article was translated by Hendarsyah Tarmizi.