January 30, 2009 / 12:59 PM / 11 years ago

DAVOS-UPDATE 1-Indonesia exports slowing after 20 pct 2008 jump

(Recasts, adds details)

By Jonathan Lynn

DAVOS, Switzerland, Jan 30 (Reuters) - Indonesia’s exports are beginning to slow under the impact of falling commodities prices and slowing global demand, after rising by around one fifth last year, Trade Minister Mari Pangestu said on Friday.

Southeast Asia’s biggest economy is also facing increasing protectionist pressures from developed and developing countries, she told Reuters in an interview.

Non-oil and gas exports in the first 11 months of last year totalled $100.45 billion, 20.18 percent higher than a year earlier. Pangestu said that data due next week would show they were still around 20 percent higher for the year as a whole.

“Even with a big decline in December I think we can expect total export growth to be 20 percent, or close to 20 percent,” she said, making clear she was referring to non-oil and gas exports.

Pangestu said Indonesian exports had been buoyed up by record commodities prices in the first half of last year.

Slowing demand in the last quarter of 2008, however, was beginning to affect export volumes, she said.

SECTOR-SPECIFIC PROTECTIONISM

Indonesia is also beginning to encounter barriers to its exports, she said, echoing concerns about growing protectionism from many trade ministers as the economic crisis intensifies.

However, these measures are quite sector-specific, she said, pointing to anti-dumping measures by Turkey, Egypt and Brazil against Indonesian textile yarn, and by Australia against Indonesian paper.

“We are concerned that there will be increases of such measures, including possible other kinds of regulations that would appear to restrict imports,” she said.

Pangestu dismissed the idea that requirements on foreign pharmaceuticals companies to set up production facilities in Indonesia to be licensed to distribute drugs were one such non-tariff barrier.

The measure, enforcing a health ministry decree from 2000, was intended to tighten up the accountability of distributors by making them produce in Indonesia or cooperate with a local manufacturer in order to register their products.

In addition, it does not apply to drugs with patent protection, the vast majority of pharmaceutical imports, but aims to encourage local production of generics, she said.

Pangestu said Indonesia wanted a conclusion of the World Trade Organisation’s Doha round to free up world trade, which was even more important now to shield developing countries from protectionist moves by rich nations, but this would require a push from political leaders.

“The relevancy and the existence of the WTO is even more imperative now. We should not reinvent another architecture, because it’s still the best architecture we have, and it’s still the fairest architecture we have for developing countries,” she said.

(For full coverage, blogs and TV from Davos go to www.reuters.com/davos)

Reporting by Jonathan Lynn; editing by Simon Jessop

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