In tackling the Indonesia’s trade deficit, the newly appointed Industry Minister Agus Gumiwang Kartasasmita will support the trade sector by encouraging the industries that can support to increase export, while on the same time to optimize that industries that can subtitude the goods currently imported.
Talking to the press relating the ministry’s main focus for the next five years, Agus said that he would focus to develop the industrial zones that can increase the exports of manufacturing goods and to produce subtitution consumer goods now being still imported.
“Our focus is to reduce imports of consumer goods and to promote import-substitution industrialization to reduce the country’s current account deficit, which has continued to increase in recent months because of the country’s sluggish exports,” he said.
“The most important thing is that we should reduce the current account deficit so we will need to substitute for imported products,” Agus told reporters in his address during the transfer of duties ceremony at his new office in Jakarta.
Indonesia’s exports dropped 5.74 percent year-on-year (yoy) in September to US$14.1 billion, marking an 11th consecutive month of yoy declines, BPS reported. Imports, meanwhile, were down 2.41 percent yoy in September at $14.2 billion, resulting in a trade deficit of $160 million.
Agus said he is planning to develop more economic and industrial areas and also looking to strengthen inter-ministerial coordination in a bid to remove bureaucratic hurdles in executing the government’s programs.
Economists said they believe the government’s lack of focus on industrial development was the reason for the decline of the contribution of the manufacturing sector to the country’s gross domestic product (GDP), which was almost 30 percent in 2002.
According to Statistics Indonesia (BPS) data, the manufacturing sector’s GDP contribution fell to 19.52 percent in the second quarter of this year, as the sector only grew 3.5 percent annually, below GDP growth of 5 percent.
President Jokowi’s administration has struggled to boost exports in a bid to jack up the country’s sluggish economic growth amid lower commodity prices and heightening trade tensions that have disrupted global demand.