Strong exports push Indonesia's balance of payments into surplus

The Jakarta Post, Jakarta

Strong commodity exports and an influx of foreign funds into the local capital markets pushed Indonesia's balance of payments during the second quarter to a surplus of US$3.63 billion, the central bank reported Thursday.

The surplus resulted from the current account -- the balance's component of goods and services trade and other transfers -- rising to $2.55 billion from $1.71 billion during the second quarter last year.

Indonesia's capital and financial account -- the component of investments -- also surged to $2.21 billion from only $25 million.

Adding to 2007's first quarter figures, the overall surplus until June reached some $8 billion, with Bank Indonesia expecting that figure to reach $11.49 billion by the end of the year.

Indonesia's foreign exchange reserves was at $50.92 billion and is expected to reach $54.36 billion by the end of the year. The latest figure, on Aug. 31, was $51.42 billion.

Triono Widodo, BI director for monetary statistics, said the current account surplus mostly came from non-oil and gas exports, which grew 20 percent on-year on strong global demand, and prices for Indonesia's commodities, which registered a $7 billion surplus.

Indonesia also saw gas exports at a $2.9 billion surplus, making the country a net energy exporter by offsetting an oil trade deficit of $1.6 billion. The deficit in services trade, meanwhile, rose to $2.8 billion and transfers saw a $3.1 billion deficit.

In the financial account, Triono said a rush of investors in a still liquid global market buying up Indonesian assets had increased the surplus in portfolio investments to $5.7 billion, from $700 million last year.

BI is however expecting a slight slowdown in both exports and portfolio investments in the second half due to the effects of the recent sub-prime mortgage crisis in the U.S. which is threatening the country's economic growth.

The surplus in direct fixed capital investment also rose to $1.3 billion in the second quarter from $1.1 billion last year, due to an improving business climate.
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