Nontraditional Markets Have Great Potential

In order to support the growth of exports, Indonesia is striving to open market access to partner countries through international trade agreements. Nontraditional markets have great potential.

KOMPAS/M PASCHALIA JUDITH J

Activities on the last day of the 34th Trade Expo Indonesia, Sunday (20/10/2019), at ICE BSD, Tangerang.

JAKARTA, KOMPAS — The storm of economic recession is hard to predict. With a view to prevailing over world economic slowdown, Indonesia will focus on opening nontraditional export markets. The access to trade with partner countries will be continuously expanded by international trade deals.

President Joko “Jokowi” Widodo has stated that amid the imminent global recession, the Indonesian economy still grew by 5.44 percent in the second quarter of 2022. Indonesia is one of the countries with the highest economic growth among Group of Twenty (G20) members and other nations.

Our country should remain optimistic, but indeed we should keep alert and cautious because the storm is hard to calculate, hard to predict; [it is] hard to gauge how far it will spread and how it will affect us.

During the period of January-September 2022, the balance of trade listed a surplus worth US$39.87 billion, meaning the trade surplus has lasted for 29 successive months. The 4.6 percent inflation increase in August 2022 was still assessed as being under control. In the second quarter of 2022, the inflation rate rose to 5.9 percent as the fuel price was surging.

“Our country should remain optimistic, but indeed we should keep alert and cautious because the storm is hard to calculate, hard to predict; [it is] hard to gauge how far it will spread and how it will affect us,” said President Jokowi at the opening of Trade Expo Indonesia (TEI) in ICE BSD city, Tangerang, Banten, on Wednesday (19/10/2022).

Also read:

> Hunting for Investors at Dubai Expo

> Indonesia Gains New Investment Deals

Indonesia’s balance of trade recorded a US$5.7 billion surplus in August 2022, year-on-year bank credits in July 2022 grew by 10.7 percent and the consumer confidence index in August 2022 amounted to 124.7. With the Indonesian economy continuing to grow, global confidence is expected to improve. Nevertheless, the effort to strengthen macroeconomic performance has been inadequate, as it may be off-target; it has to be backed by microeconomic action. It requires combined movements of monetary or fiscal authorities and regional administrations.

The head of state added that Indonesia attempted to overcome higher inflation not only with the central bank’s interest rate increase policy but also by managing sources of inflation on the market. Among the measures is the use of the Regional Budget of Income and Expenditure (APBD) to cover the higher cost of producers’ transportation to consumers.

Market expansion

Trade Minister Zulkifli Hasan indicated that in support of the growth of exports, Indonesia continues to open the market access to partner countries via international trade agreements. Nontraditional markets have vast potential to explore, including the countries in Africa with a population of around 1 billion; those in South Asia like India, Pakistan and Bangladesh with a population of about 1.5 billion; as well as those in Central Asia and the Middle East.

“In order to counteract world economic slowdown, we will be focusing on opening nontraditional markets,” said Zulkifli.

KOMPAS/RADITYA HELABUMI

Minister of Trade Zulkifli Hasan (center) shows the new logo for the Jakarta Muslim Fashion Week (JMFW) 2023 during the JMFW 2023 kick off press conference in Jakarta, Wednesday (12/10/2022). JMFW 2023 will be held in conjunction with the 37th Trade Expo Center at ICE BSD, Tangerang, on 20-22 October 2022.

At present, the main export destinations that have long established trade relations with Indonesia, or traditional markets, include the United States, China and Japan. In September 2022, China, the U.S. and Japan were still the main markets for Indonesia’s nonoil/gas exports. Total nonoil/gas exports to the three countries amounted to US$10.37 billion, contributing 44.17 percent to national nonoil/gas exports.

The steps taken to open nontraditional markets include the signing of a comprehensive economic partnership agreement between Indonesia and the United Arab Emirates (IUAE CEPA) in July 2022, which is expected to be ratified by the House of Representatives (DPR) before 17 November 2022.

Additionally, there was the endorsement of the Indonesia-Korea trade agreement law, already ratified by the DPR. An Indonesian trade mission visited India on 21-22 August 2022, resulting in 22 trade deals worth US$3.2 billion for paper, palm oil, coal and more. Another trade mission went to Qatar on 9-10 October 2022, recording a potential transaction value of Rp 100 billion by inviting micro, small and medium enterprises (MSMEs).

In order to counteract world economic slowdown, we will be focusing on opening nontraditional markets.

Zulkifli added that the 37^th TEI was expected to become a turning point in Indonesia’s post-Covid-19 economic activity. The products offered are divided into seven categories: manufactures, beauty products, health supplies, medical equipment, furniture, digital services, food and beverage, and decorations. The ministry set the target of export contracts during the expo at US$10 billion.

TEI 2022 is participated in by 795 export business firms, some 30 percent of which are MSMEs, and 2,288 potential buyers from 176 countries. Before the expo started, export contracts worth US$1.5 billion were signed. During the TEI period of 2017-2021, total transactions reached US$26.55 billion with 142,171 visitors.

Pharmaceutical industry

The Dexa Group member Ferron Par Pharmaceuticals signed export cooperation accords with Allgen Pharmaceutical & Generic BV from the Netherlands, and with Bioton SA from Poland, on Wednesday in Tangerang. Ferron’s cooperation with Allgen is for the marketing of its product, Glucient SR, which contains metformin, for lowering blood sugar in people suffering from diabetes, by the technology of sustained release.

According to the Trade Ministry’s Director General of National Export Development Didi Sumedi, who was present on the occasion, the opportunity for Indonesia’s pharmaceutical sector to penetrate export markets is still vast. The pharmaceutical industry’s export value of chemical medicines and traditional drugs increased from US$602.5 million in 2018 to US$635.3 million in 2020.

This article was translated by Aris Prawira.