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Indonesia moves to aid exports in 6 new sectors

AP-Dow Jones News Service - February 14, 1997

Jakarta – The Indonesian government announced Friday deregulation measures that extend export facilities to six new sectors in a bid to bolster the country's non-oil-and gas export competitiveness.

Minister of Industry and Trade Tunky Ariwibowo told reporters Friday these export facilities will be focused on resource-based sectors, which have high locally-based content.

The six sectors included pulp and paper; processed rubber; processed food, such as canned fish and vegetables, sorbitol, glutamic acid, monosodium glutamate (MSG), biscuits, instant noodles, and dessicated coconut; vegetable oil products, such as palm oil, olein, and margarine; toys; and frozen fish and shrimps.

The companies, which are eligible for these facilities, will receive, for example, their value-added tax reimbursements within 10 days to aid their efforts, Tunky said.

They also will be allowed to submit export declaration documents directly to port officials without going through foreign exchange banks, allowing their documents to be processed quicker.

And Bank Indonesia, the nation's central bank, also will offer a lower discount rate - which is pegged at the Singapore Interbank Offered Rate (SIBOR) - to the 'bankers' acceptance' notes if these exporting companies sell the notes to Bank Indonesia, Tunky said.

These banker's acceptance notes, received by exporters from importing counterparts, can be sold to banks in order to receive cash earlier than the cash-in date stated in the notes.

The government granted last year such facilities to four other sectors: textile and textile products; electronics; finished wooden furniture; and finished leather goods.

'We expanded the facilities to ten groups of commodities as the growth of our non-oil-and gas exports in the last two to three years was less than satisfactory,' Tunky stated.

Indonesia's non-oil-and gas exports increased 10.2% in the first eleven months of 1996 to $34.6 billion from $31.4 billion in the same period in 1995.

Non-oil exports, however, have shown an unsettling sign of deteriorating growth, analysts note. They grew by 15% in 1995, which slowed to 13% over the first half of 1996 and further slowed to around 4.3% year-on-year in November.

The ten sectors combined generated 50% of Indonesia's foreign exchange earnings in the non-oil-and gas sector in 1996, Tunky said.