Indonesia: U.S. exports continue their downward spiral
Don Ryan
U.S. Exports Continue Their Downward Spiral
U.S. exports to Indonesia continue their downward spiral. After peaking in 1986 at $946 million, our sales dropped to $767 million last year and will likely fall again this year, to an anticipated $650 million. Key losers have been civil engineering equipment – reflecting a lower level of construction activity – aircraft, and wheat. Pulp and waste paper, cotton and cotton waste, soybeans, and fertilizers recorded modest gains.
The driving force in the cutbacks has been the Indonesian Government’s effort to cap imports, while at the same time pushing up non-oil exports to relieve some of the strain on current-account deficits. It is winning the battle. The current-account deficit dropped 50 percent, from $4 billion in 1986-87, to $2 billion in 1987-88.
Indonesia’s big success story has been its ability to drive up non-oil exports. The country is striving to export more non-oil products than oil and gas, a task in which it succeeded for the first time last November. As a consequence, merchandise exports jumped 22 percent last year to $16.5 billion, not far off the figures achieved when oil was priced at $29 per barrel.
To employ the two million workers added to the workforce each year, Indonesia must draw in large amounts of investment and technology, The United States has been targeted especially by Indonesia for this purpose. An investment mission visited Los Angeles in late February, and a Ministerial-level mission is coming to New York. Indonesia’s pitch to U.S. industry is that it is the “NIC of the 90s,” citing its large population base, rich natural resources, and dedication to deregulating and improving its investment climate. Indonesia has issued three well-received deregulation packages over the last 18 months, although Indonesian officials acknowledge that further effort is necessary.
Indonesia offers a special opportunity for U.S. telecommunications equipment and service suppliers. To capture these opportunities, the Commerce Department has set up a telecommunications work program with the Indonesian Telecommunications Ministry. Indonesia is becoming very interested in the “BOT” (build/operate/transfer) process as a means to compete for major amounts of telecommunications services, without taking on excessive amounts of additional foreign debt. Creative financing is called for. The Commerce Department expects to have a series of programs this year developing these concepts with Indonesia and bringing our telecommunications executives and senior PTT Ministry officials together. Call Indonesia desk officer Don Ryan at (202) 377-3875 for details.
COPYRIGHT 1988 U.S. Government Printing Office
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