Indonesia Records Surplus in Trade with G20 Countries

TOTOK WIJAYANTO

Trucks line up to transport containers from ship hulls at Tanjung Priok Port, Jakarta, Wednesday (2/3/2022). Indonesia has recorded a surplus in trade of goods with the Group of 20 member countries over the last two years.

JAKARTA, KOMPAS — Indonesia has recorded a surplus in trade of goods with Group of 20 member countries during the last two years. Indonesian’s main export commodities to these countries are mineral fuels; iron and steel; animal/vegetable fats and oils; metal ore, slag and ash; as well as electrical machines and components.

However, Indonesia's exports to some of the 20 countries have begun to decline. This indicates that the global economic slowdown and high inflation have begun to hurt a number of Indonesia's trading-partner countries.

The deputy for Distribution and Services Statistics at Statistic Indonesia (BPS), Setianto, said on Tuesday (11/15/2022) that the total surplus value of Indonesia's trade balance against the G20 member countries in January-October 2022 amounted to US$27.6 billion or around Rp 429.57 trillion. In 2021, Indonesia also booked a surplus of $16.4 billion.

"However, if it is broken down per G20 member country, Indonesia only records a trade balance surplus with eight countries and one region. Meanwhile, with 10 other member countries, Indonesia still suffers a trade deficit," he said at a press conference held on a hybrid basis in Jakarta.

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Based on BPS data, in the last two years, Indonesia has recorded a trade balance surplus with the United States, India, the European Union, Japan, Italy, Turkey, Mexico, South Korea and the United Kingdom. Meanwhile, Indonesia posted trade deficit with Australia, Saudi Arabia, China, Brazil, Argentina, Canada, South Africa, Russia, Germany and France.

In January-October 2022, Indonesia’s main non-oil and gas export to the G20 countries were minerals worth $30.55 billion, iron and steel $18.70 billion and fats and animal/vegetable oils worth $17.89 billion. Indonesia also exported metal ore, slag and ash worth $7.14 billion as well as electrical machinery/equipment and its parts totaling $6.93 billion.

BPS also stated that Indonesia's trade balance in October 2022 and January-October 2022 respectively had a surplus of $5.67 billion and $45.52 billion. Even so, Indonesia's exports, especially non-oil and gas, began to decline.

Export slowdown

PT Bank Danamon Indonesia’s economic analyst, Irman Faiz, explained, in October 2022, exports only grew 12.3 percent to $25 billion year-on-year. The export growth fell from 20.2 percent in September, 2022.

“This indicates that exports grew moderately in line with the global economic slowdown and falling commodity prices, especially crude palm oil (CPO) and iron ore. The demand for a number of Indonesia's trading partner countries has fallen because the economies of these countries are slowing down," he said.

BPS also noted that Indonesia's non-oil and gas exports grew slowly in the last two months. The value of Indonesia’s non-oil and gas exports in October 2022 fell 0.14 percent on a monthly basis. In September 2022, RI's non-oil and gas exports also dropped minus 10.31 percent.

This indicates that exports grew moderately in line with the global economic slowdown and falling commodity prices, especially crude palm oil (CPO) and iron ore.

KOMPAS/TOTOK WIJAYANTO (TOK)

Container loading and unloading activities onto cargo ships at the New Priok Container Terminal (NPCT) 1 container terminal, North Jakarta, Thursday (10/11/2022).

Meanwhile on an annual basis, the non-oil and gas trade balance is still growing positively. However, the growth trend is slowing down or falling. In September 2022 and October 2022, Indonesia's non-oil and gas trade balance grew 19.26 percent and 11.45 percent, respectively.

According to Setianto, the decline in non-oil and gas export growth in October 2022 was mainly due to a decrease in exports of metal ore, slag and ash worth $407.7 million. Other commodities that fell were electrical machinery/equipment and its parts, pulp from wood, various chemical products, as well as wood and wood products. "The decline in exports was the result of the economic slowdown and high inflation in a number of destination countries for Indonesia's trade partners," he said.

Import of raw materials

BPS also reported a decrease in imports of raw materials and capital goods used by the manufacturing industry. The import value in October 2022 reached $19.14 billion, or 3.4 percent lower compared to September 2022. Based on its usage, imports of raw/auxiliary materials in October 2022 fell 3.99 percent, while capital goods fell 7.22 percent compared to the previous month.

This decline has occurred since the previous month. BPS noted imports in September 2022 were worth $19.81 billion, a decrease of 10.58 percent compared to August 2022. Meanwhile, imports of raw/auxiliary materials in September 2022 fell 11.07 percent, while capital goods fell 6.39 percent compared with the previous month.

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The head of Center of Industry, Trade and Investment Institute for Development of Economics and Finance (Indef), Andry Satrio Nugroho, said imports of raw/auxiliary materials and capital goods were affected by sluggish world demand due to global economic pressure. According to him, November will be the pinnacle of testing for the national industry amid the trend of a world economic slowdown. The import value of raw/auxiliary materials and capital goods toward the end of the year usually increases.

“Christmas and New Year are usually the peak of world demand. November is the pinnacle of testing for the national industry amid the trend of a world economic slowdown," he said when contacted, on Tuesday.

The chairman of the Manufacturing Industry of the Indonesian Employers' Association, Johnny Darmawan, said that the decline in imports of raw/auxiliary materials and capital goods indicated that the industry's performance has been stagnant even though it has not yet declined. "One of the indications is a number of layoffs a month ago," he said.

This article was translated by Hendarsyah Tarmizi.