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INTERNATIONAL ECONOMY
Asia remain to be the center of the world economic growth, particularly Southeast Asia
and East Asia, which held 7.5% growth in 2005, compared to the economic growth in
developed countries such as USA, Japan and European which merely reached 2.5% (Table
3). It is estimated that the Asian economy will expand by 7.4% with China as its main
driver (9.3%), while the growth in the developed countries will increase by 2.9% with US
to be its main contributor (3.6%).

Table 3: The Growth of Macro Economy in Asian Countries in 2005 and the
estimation of 2006
GDP Growth

Inflation

Trade Balance (% of

Fiscal Balance (% of

GDP)

GDP)


2005

2006

2005

2006

2005

2006

2005

2006

Asia

7.5


7.4

3.1

4.2

4.1

3.8

-1.1

-1.2

China

9.9

9.3


1.8

3.5

5.5

6.0

-0.9

-1.0

Hong Kong

7.3

5.7

1.1


2.6

11.1

9.7

1.0

0.6

India

8.1

7.6

4.5

5.0


-2.1

-2.5

-4.1

-3.8

Korea

4.0

5.5

2.7

2.6

2.1


0.7

0.6

0.5

Malaysia

5.3

5.5

3.1

4.1

15.2

12.6


-2.8

-3.6

Philippines

5.1

5.1

7.6

7.0

2.4

2.0

-2.7


-2.0

Singapore

6.4

6.5

0.5

2.0

28.4

24.4

6.0

6.0


Taiwan

4.1

4.0

2.3

2.0

4.7

5.0

-2.4

-3.0

Thailand


4.5

4.7

4.5

5.2

-2.1

-1.6

-0.3

-1.4

Vietnam

8.4


8.0

8.3

7.5

-2.6

-2.9

-2.0

-2.5

Industrial

2.5

2.9

2.3

2.4

-2.0

-2.5

-2.4

-2.3

USA

3.5

3.6

3.4

3.4

-6.4

-7.3

-2.6

-2.5

Japan

2.6

2.7

-0.1

0.5

3.6

3.7

-5.3

-4.4

Euro area

1.4

2.1

2.2

2.1

-0.4

-0.5

-2.4

-2.7

World

3.4

3.7

2.9

3.1

-0.8

-1.2

-1.9

-1.9

Countries

Source: ADB and Citigroup (estimation of 2006)

Asia as the center of economic growth has certainly brought about a great impact on
Indonesia’s international trade, intra-trades as well as inter-trade, export and import,

though the latter is strongly dependent on the growth of domestic economic activities.
Further, export growth is also dependent on the economic growth of destination markets as
well as the production capacity in the country. In other words, the rapid growth of global
economy, particularly in Asia, is not often followed by a sharp export growth of Indonesia.

Latest data from BPS indicated that the export value in January 2006, including oil/gas
and non-oil/gas each totaled US$ 7.56 billion and US$ 5.73 billion respectively, whereas
import value each totaled US$4.39 billion and US$3.18 billion respectively. Thus, the
foreign trade balance of Indonesia for the month of January 2006, with and without oil/gas
enjoyed a surplus of each US$ 3.17 billion and US$ 2.55 billion respectively. Meaning
that, the export, with and without oil/gas each increased by 23.26% and 16.83% compared
to those in January 2005. The hike in export value mainly attributable to the increased in
the export value of mining sector from US$ 0.44 billion to US$ 0.97 billion. Meanwhile,
the import value in January 2006, with and without oil/gas, improved by 6.49% and 3.89%
respectively, compared to the same period in the previous year. During the month of
January 2006, the growth of import was mainly dominated by the import of raw materials
amounting to US$3.23 billion or improved by 1.41% compare to the same period in 2005
totaled US$ 3.18 billion.

Yet, judging from the performance back in the year of 2000, the total export value
(oil/gas and non-oil/gas) had once trimmed from around US$65.4 billion in 2000 to US$
57.4 billion in 2001, but kept growing ever since that period. During the same period,
foreign trade balance had also dropped from US$ 25 million to US$ 22.7 million (Figure
2).

The growth of Indonesia’s foreign trade balance based on oil/gas and non-oil/gas
sectors during the last one decade may be seen in Table 4. Oil/gas sector maintain to be the
prominent factor as the source of surplus to foreign trade balance of Indonesia. Without the
role oil/gas sector, the average surplus of foreign trade balance per year was lower
compared to the surplus with oil/gas, even suffered a deficit in certain years.

According to the goods category based on SITC, industrial products has been the
second important export products for Indonesia, other that fuel, lubricating oil and so forth.
Especially the export of machineries and transportation means has spurred significantly

from around US$ 3.1 billion in 1994 to an almost US$ 14 billion in 2005. Export value of
industrial products based on its materials has also improved, though in a relatively
insignificant growth from US$9.5 billion to US$ 14.4 billion (Table 5).

Figure 2: The Trend of Growth of Foreign Trade Balance (NP), Export (X) and
Import (M), Indonesia, 2000-2005 (million US$).
100000
90000
80000
70000
60000
50000
40000
30000
20000
10000
0

NP
X
M

2000

2001

2002

2003

2004

2005

Source: BPS.

Table 4. Trade Balance of Oil and Gas and Non-Oil and Gas, Indonesia, 1994January 2006 (billion US$)
Including Oil and Gas

Without Oil and Gas

Export

Import

Export

Import

1994

40.1

31.9

30.4

29.6

1995

45.4

40.6

34.95

37.7

1996

49.8

42.9

38.1

39.3

1997

53.4

41.7

41.8

37.8

1998

48.9

27.3

40.98

24.7

1999

48.7

24.0

38.9

20.3

2000

62.1

33.5

47.8

27.5

2001

56.3

30.96

43.7

25.5

2002

57.2

31.3

45.1

24.8

2003

61.1

32.6

47.4

24.9

2004

71.6

46.5

55.94

34.8

2005

85.7

57.7

66.4

40.2

Jan.2006

7.6

4.4

5.7

3.2

Year

Source: BPS

Further, Table 6 showed that plywood, ready to wear clothes, and other textile products
(TPT) are among the industrial products of Indonesia, to be the leading export products
from the manufacturing sector. Electricity utilities have the potential to be the leading
export product from Indonesia though the average export value per year is relatively small.

Table 5. The Growth of Export Value based on Commodities Classification (SITC),
Indonesia, 1994-Jan.2006 (billion US$)
0

1

2

3

4

5

6

7

8

9

Total
export

1994

3.6

0.14

3.2

10.5

1.4

1.0

9.5

3.1

7.6

0.2

40.1

1995

3.6

0.2

5.03

11.5

1.4

1.5

10.4

3.8

7.8

0.05

45.4

1996

3.8

0.23

5.1

12.9

1.6

1.7

10.8

5.0

8.9

0.1

49.8

1997

3.6

0.3

4.4

13.4

2.3

1.9

9.7

4.6

6.98

6.6

53.4

1998

3.7

0.3

3.7

9.4

1.5

2.1

8.8

4.7

6.7

8.0

48.9

1999

3.7

0.23

3.4

11.2

1.8

2.4

11.0

5.3

8.2

1.5

48.7

2000

3.5

0.23

4.3

15.7

1.8

3.2

12.3

10.8

9.95

0.4

62.1

2001

3.3

0.3

4.2

14.3

1.5

2.8

11.2

9.1

9.3

0.44

56.3

2002

3.6

0.3

4.5

13.9

2.7

2.97

10.9

9.8

8.2

0.3

57.2

2003

3.7

0.2

5.3

15.7

3.0

3.4

11.2

9.8

8.5

0.3

61.1

2004

3.97

0.3

6.4

18.6

4.5

4.0

12.9

11.5

9.2

0.25

71.6

2005

4.6

0.3

9.0

23.7

5.0

4.5

14.4

13.6

10.3

0.2

85.7

Jan.2006

0.4

0.02

0.9

2.4

0.4

0.4

1.2

1.01

0.88

0.07

7.6

Note: 0= Food Material & Live Animals; 1= Beverages & Tobacco; 2=Raw Material; 3=Fuel, Polish
Material & etc; 4=Vegetable and Animal Oil/Fats; 5=Chemicals; 6=Industrial Products based on material;
7=Machineries
transaction.
Source: BPS

& Transportation; 8= Other Industrial Products; 9=Others special commodities &

Table 6. The Growth of Industrial Products Export Value, 1996-Jan.2006 (billion US$)
Products

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

Jan.2006

1. Processed Woods
-Plywood

3.6

3.4

2.1

2.3

1.99

1.8

1.8

1.7

1.6

1.4

0.09

-Sawdust

0.5

0.4

0.2

0.3

0.3

0.3

0.4

0.3

0.3

0.3

0.02

-Others

1.1

1.5

2.2

1.2

1.2

1.1

1.1

1.2

1.4

1.4

0.1

-Tin

0.3

0.3

0.3

0.3

0.2

0.2

0.2

0.3

0.6

0.9

0.08

-Aluminum

0.4

0.4

0.4

0.3

0.5

0.4

0.4

0.4

0.5

0.6

0.06

-Others

0.2

0.2

0.1

0.2

0.3

0.2

0.003

0.2

0.7

0.9

0.06

3. Clothes

3.6

2.9

2.6

3.8

4.7

4.5

3.9

4.04

4.4

4.97

0.4

2.98

3.7

4.7

3.4

3.6

3.2

3.1

3.1

3.4

3.7

0.3

4. Processed Rubber

2.2

1.99

1.6

1.2

1.3

1.2

1.6

2.1

2.95

3.6

0.4

5. Animal Foods

0.2

0.1

0.1

0.09

0.09

0.08

0.1

0.1

0.2

0.2

0.01

6. Essential Oil

0.08

0.09

0.1

0.1

0.1

0.1

0.2

0.2

0.2

0.2

0.01

7. Coconut Oil

0.8

1.5

0.8

1.1

1.1

1.1

2.1

2.5

3.4

3.8

0.3

8. Fats Acid

0.2

0.09

0.4

0.2

0.2

0.1

0.2

0.2

0.3

0.3

0.03

9. Electricity Tools

1.4

1.4

1.5

1.7

3.2

2.6

2.7

3.1

3.5

4.4

0.4

10. Processed Foods

0.96

0.8

0.8

0.96

0.96

1.0

1.2

1.2

1.5

1.8

0.1

11. Cement

0.02

0.04

0.08

0.1

0.1

0.2

0.1

0.09

0.1

0.1

0.01

12. Plaiting Products

0.06

0.04

0.01

0.06

0.07

0.08

0.08

0.07

0.07

0.06

0.01

13. Chemicals

0.6

0.7

1.01

0.99

1.3

1.2

1.3

1.5

1.95

2.1

0.2

14. Fertilizer

0.3

0.3

0.2

0.2

0.2

0.1

0.1

0.2

0.09

0.2

0.01

15.Leather & its products

0.07

0.1

0.2

0.1

0.1

0.1

0.08

0.09

0.1

0.1

0.01

16. Paper & its products

0.96

0.9

1.4

1.97

2.3

2.0

2.1

2.0

2.2

2.3

0.2

17. Others

11.6

14.2

14.0

12.8

18.2

15.96

16.2

16.4

19.3

22.4

1.8

TOTAL

32.1

34.99

34.6

33.3

42.0

37.7

38.7

40.9

48.7

55.6

4.5

2. Metal products

-Other TPT