Andi Haswidi, Jakarta – Having trade deficits with certain partners is natural, but not when the number of partners keeps growing and the total deficits jumping exponentially.
The situation is true for Indonesia, at least with its neighbors in Southeast Asia, as shown by the latest records from the Central Statistics Agency (BPS) on real trade transactions from January until September.
The latest to topple the biggest democracy in the region is Malaysia, with whom the country suffered a total deficit of US$662 million during the Jan-Sept period, a free fall from a surplus of $1 billion in the same period in 2006, mostly due to rising oil and refined oil imports.
With the deficit with Malaysia, Indonesia's total trade with main regional trade partners including Singapore, Thailand, Philippines, Brunei Darussalam and Vietnam fell to a total deficit of $1 billion or an increase of 128.3 percent from the $445.33 million in deficit in the same period in 2006.
In the oil and gas category, the country's total trade deficit with the six countries during the period reached $7.04 billion, which rose by 14.9 percent from the same period in 2006.
Indonesia's total exports to its neighboring countries reached $16 billion during the period, while its total imports amounted to $17 billion.
In addition to Malaysia, Indonesia suffered a trade deficit of $1.29 billion with Brunei due to oil imports, and $933 million with Thailand – mostly due to non-oil and gas products.
What at first glance seems like a nice change in the period is the trade with Singapore, which suddenly changed to a surplus of $707.3 million from January after having constant deficits from 2004 until 2006.
Previous records show the deficit on oil and gas trade with Singapore grew at annual rate of 47 percent, from $1.4 billion in 2002 to $5.2 billion until 2006. Oil and gas imports from Singapore from January to September dropped by 14.6 percent, but only to be replaced by oil imports from Malaysia.
Indonesia is the largest oil and gas producer in the region, but still imports to meet rising fuel needs due to the decline in the country's oil production and also because its own crude oil is not suitable for most of its existing refinery plants.
The outlook, analysts said, may be worse as domestic demand for oil will expand while the country still likely to miss its net oil production target of 1.034 million barrels per day due to various problems hampering investments in the sector.
"As national production cannot meet the demand, we import 400,000 barrels per day, which has led to the increase of Malaysia's share, including other countries such as Africa and Australia," energy analyst Kurtubi said.
In the non-oil and gas category, the growth trend of imports is speeding up rapidly, particularly with Vietnam, which grew 323.3 percent from $106.9 million in January until September 2006 to $452.9 million in the same period in 2007.
Non-oil and gas imports from the Philippines, Thailand and Malaysia are also growing fast, at 28.7 percent, 38.6 percent and 39.8 percent respectively.
Another analyst, Beginda Pakpahan of the University of Indonesia, warned that things could go from bad to worse in the upcoming trade and economy liberalization frameworks such as the ASEAN Economic Community and ASEAN plus Japan, China, Korea and Europe. (ind)