Kalla sticking to his guns on 20% export target

Andi Haswidi, The Jakarta Post, Jakarta

The government is insisting on a 20 percent growth target for exports this year despite a weakening global economy and internal problems, including the high cost of doing business here.

"We will stick by the target set by the President despite the slowing down of the world economy and some internal factors," Vice President Jusuf Kalla said after a limited Cabinet meeting at the Trade Ministry offices Monday.

Taking a more realistic view, Trade Minister Mari Elka Pangestu said that the most optimistic outcome would be export growth of 14.5 percent growth.

She said that the world economy was expected to grow 7.9 percent this year, which was lower than the 8.9 percent experienced in 2006. This would result in tighter competition and affect the demand for commodity exports from Indonesia.

"There is a possibility that there will be declines in the prices of primary commodities as a result of decreasing external demand and increasing stocks," Mari said.

According to the ministry's forecast, there will be a decrease of 3.4 percent in demand for primary commodities such as coal, CPO, rubber, copper and tin this year, and a 13 percent decrease in 2008.

Also, Mari cited the country's woefully inadequate road infrastructure and inefficiencies at Indonesian ports as long-running problems that, along with bureaucratic inefficiency, resulted in a high-cost economy.

However, Kalla insisted that the 20 percent target could still be attained given 2006's remarkable export growth.

Last year, exports hit a new record at slightly more than US$100 billion, or 19.7 percent higher than in 2005. The surge in exports was the result of increased demand for non-oil and gas commodities, which contributed $79.5 billion to the overall export value.

"We realize there are problems, like the overall state of our infrastructure, bureaucratic issues, concerns related to our image, energy supplies, etc. However, progress is now being made," Kalla argued.

"The financial situation is no longer an issue. We need to improve our promotion, standardization, productivity and coordination, which will have to be done jointly with business players and the banks."

In order to achieve the target, the government would prioritize increased export volumes for 10 commodity groups that together accounted for 44.8 percent of last year's total export value.

Kalla said the groups in question were textiles and garments, electronics, shoes and footwear, automotive spare parts, CPO, rubber and rubber products, furniture, shrimp, cacao and coffee.

Other commodities that would also receive special attention this year included coal, copper, nickel, tin, pulp and paper, plywood and alcohol.
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