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The trade deficit with China in the non-oil and gas sector
skyrocketed by more than 3500 percent from US$35 million in 2006 to
$1.28 billion last year, the Central Statistics Agency says.
In its latest report, the agency also shows that China emerged as
Indonesia's biggest import origin for non-oil and gas products in 2007
with a total imports worth $7.95 billion, beating long-time chart
topper Japan with $6.46 billion.
Compared to the country's total non-oil and gas imports, which reached
$52.5 billion last year, China dominated with approximately 15.14
percent, followed by Japan with 12.3 percent and the United States with
8.98 percent.
Indonesia's total imports from China within the category remarkably
jumped by 44.5 percent that year from the total of $5.5 billion made in
2006, far beyond the average increase from 2002 until 2006 that reached
29.6 percent.
"China has become a global exporter for quite some time. Even developed
countries are afraid to compete head-to-head with it due to its ability
to maintain efficiency in production costs."
"I think it's very natural for us to grow such a high dependency on
products from China, considering our condition now," said Aviliani, an
economist at the Institute for Development of Economics and Finance.
The deficit, she said, was unavoidable as Indonesia's real economy was
already shifting from industry-based toward trade-based, as shown by
the growing number of small businesses.
"Most of these small businesses do not produce goods, but rather sell
them, which mainly come from China as they are cheap, within the range
of our purchasing power," she said.
On the policy front, she highlighted the chronic weakness in
coordination among government departments, particularly the Trade
Ministry and Industry Ministry.
"The Trade Ministry keeps on opening up import markets and neglecting
to support the certain sectors that define the strength of the
country's industry. For instance, we now have enough rice, so why are
we still allowing it to be imported?" she said.
Focusing on the sudden surge in imports from China and the remarkable
deficit growth, Beginda Pakpahan, a lecturer in international economy
and politics at the University of Indonesia, pointed the finger at the
ASEAN-China free trade agreement, which was signed back in 2002.
The FTA, a zero-tariff market of 1.7 billion people, is expected to be
fully implemented in 2010 for the six original ASEAN members and in
2015 for the rest. An early harvest program covering trade in goods
came into force in July 2005.
"When the early harvest took effect, we were already behind our
regional partners in ASEAN, in terms of trade and industry cohesiveness
with China, meaning they already prepared for benefiting from it while
we merely act as an export market destination from China," he said.
He warned that in the near future, China would likely to intensify its
focus on the region, particularly Indonesia with its 240 million
consumers, as an export destination in order to compensate for the
weakening demand of U.S. consumers for its products.
"A stronger cohesiveness among ASEAN is crucial to balance China's
power, something that we don't see materializing any time soon," he
said.
Speaking on a more critical note, Didik J. Rachbini, chairman of the
House of Representatives commission overseeing trade and investment
said that the government had no strategy whatsoever in facing China's
emergence as a global player.
"Chinese goods and our goods substitute for each other, meaning the two
countries produce almost exactly the same kind of manufacturing
products such as textiles, toys and food, very different from our trade
with Japan, which is obviously complementary."
"The huge trade deficit in the non-oil and gas sector clearly reflects
how Chinese products come in and move freely here without any
protective strategy in place," Didik said.
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