JAKARTA, KOMPAS – The seriousness of the government and stakeholders in controlling imports is needed in order to reduce the trade balance deficit, which has continued to widen, affecting the current account deficit.
The government also needs to promote non-oil and gas exports. During January-October 2018, non-oil and gas exports continued to fall. According to Statistics Indonesia (BPS), Indonesia recorded a trade deficit of US$5.51 billion during the period of January-October 2018. In fact, in the same period last year, the country enjoyed a trade surplus of $11.8 billion.
The head of the BPS, Suhariyanto, said the deficit occurred because oil and gas and non-oil imports continued to grow significantly. The oil and gas imports rose by 26.97 percent in October, far higher than the 19.42 percent increase recorded in September 2018.
The increase in oil and gas imports was mainly caused by a surge in global crude oil prices during the September-October period, while the increase in non-oil and gas imports was due to high domestic demand for consumer goods, industrial raw materials and capital goods.
"The surge in imports could not be offset by the performances of non-oil exports so the non-oil and gas trade balance in October 2018 suffered a deficit of $393.2 billion," he said.
According to Suhariyanto, Indonesia\'s leading commodity exports, such as fat, animal oil and crude palm oil, declined. In January-October 2018, commodity exports fell 9.94 percent compared to the same period last year. "Exports dropped because of weak demand and trade barriers imposed by a number of countries," he said.
Imports of raw materials were also quite high. For example, imports of raw sugar reached 3.9 million tons with a total value of $1.4 billion during January-October 2018, while imports of white sugar reached 75,723 tons with a total value of $31.4 million during the same period. Imports of residues and waste of the food industry rose 16.97 percent to $2.59 billion.
Suhariyanto said the surge in imports could boost economic growth. In the fourth quarter of 2018, imports are expected to spur growth in household spending, investment and trade. Nevertheless, the government’s efforts in controlling and substituting imports should be continued.
Constraints
Trade Minister Enggartiasto Lukita said that non-oil and gas exports grew by 8.73 percent during January-October this year. However, the government will try to meet the 11 percent growth target by the end of the year.
The government is optimistic that import growth throughout 2018 can be reduced to below 14 percent. The strategy in controlling the imports is still centered on the implementation of the 20 percent blended biodiesel (B20) mandatory policy and increase in import tariffs on 1,147 types of imported goods.
Finance Minister Sri Mulyani Indrawati said that, so far, the oil and gas imports were still constrained by a lack of the supervision in the implementation of B20 policies. Although the average volume of diesel imports fell by 7.5 percent on a daily basis, the annual volume of diesel imports rose 13.8 percent.
According to Energy and Mineral Resources Minister Ignasius Jonan, the increase in oil and gas imports should be coupled with efforts to increase the added value in the country’s economy, such as an increase in the production of non-oil and gas commodities, which could be exported to reduce the trade deficit.
A public policy analyst from Indonesia Services Dialogue, M. Syarif Hidayatullah, said the tourism sector could be used as a quick solution to reduce the current account deficit. (HEN / APO / CAS / KRN)