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11 October 2016

Indonesian Firms Target Greater Share of Global Trade

For many years, Andri Syarifudin, cofounder of garment maker CV Dago Agung, has had an obsession about marketing his clothing products worldwide. 

The Bandung-based entrepreneur, however, has seen his dreams fade as he struggles with a less-than adequate domestic supply of quality raw materials for his medium-sized business.

“We want to compete in the international stage but there’s not enough quality fabric and fashion accessories to begin production with so we’re still playing in the vast local market for now,” he said recently. 

Shipping goods from Indonesia, particularly Java, to foreign markets is easy in terms of logistics and duty procedures, Andri said. Problems, however, occur when exporters cannot meet demand from overseas because of a lack of quality materials. 

Such a domestic challenge, along with the global economic slowdown, has inevitably hindered Indonesian small and medium enterprises (SMEs) in taking a bigger slice of the international market, leaving Southeast Asia’s largest economy with a declining trade surplus.

Central Statistics Agency (BPS) data shows the trade surplus for January to August this year was down by 48.2 percent to US$290 million from $430 million in the corresponding period last year. Total exports last year, meanwhile, stood at $150.25 billion, creating a surplus of $7.51 billion for the first time after three straight years of deficit.

To maintain healthy trade margins as well as boosting exports, the Indonesian Chamber of Commerce and Industry (Kadin) has set an ambitious goal to see local business players exporting $750 billion worth of goods by 2030, a fivefold increase on last year’s figures. 

“This [target] is not too high. We will achieve it gradually for the next 15 years with the right steps,” said Kadin vice chairman for trade Benny Soetrisno during a public discussion on Tuesday. 

The chamber has set five strategies for achieving the goal: increasing the number of exporters, diversifying export products, expansion of markets, increasing product value and price and creating a more conducive export ecosystem in the country.

Benny said that today only about 2,000 SMEs and 300 local big firms were involved in international trade. Some 84 percent of total exports is also still dominated by the big companies, data from the Cooperatives and SME Ministry shows.

Earlier this week, the World Trade Organization predicted that growth in international trade would fall to 1.7 percent this year, the slowest pace since the 2008 financial crisis, amid a slowing global economy.

Suyanto, head of the Entrepreneurship Movement for Jakarta’s private universities, meanwhile, said there were many potential startups established by students but which faced challenges mostly in funding and registering their business, although some had succeeded.

In response to such concerns, Benny said Kadin had teamed up with the Trade Ministry’s export development centers and Cooperative and SME Ministry’s SME gallery and export consultation center in Jakarta to assist local businesses eyeing overseas markets.

“If you have good products or services, don’t hesitate to contact us. We’ll help you match with customer demand abroad and help you attain intellectual property rights for free,” said Arlinda Imbang Jaya, the Trade Ministry’s director general for export development, during the conference.

Arlinda cited an example of an SME that successfully exported diapers for pregnant woman to Africa through consultation with the ministry’s export center.

Officials and businesspeople also urged an equal spread of exports from regions in the country through revamping regional ports. Last year, Jakarta, East Kalimantan and East Java contributed 53.8 percent of the national export value.

Processed goods accounted for 76.68 percent of total exports in the first eight months of the year, with vegetable oil, jewelry, vehicles and spare parts being the top products.


Source: http://www.thejakartapost.com/news/2016/09/29/indonesian-firms-target-greater-share-global-trade.html