Tuesday, January 15, 2013

DEFICIT BALANCE of TRADE

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In the middle of high economic growth, 6% year 2012, the highest after China, inflation rate controllable, 4%, foreign investment coming, stable capital market index, one thing to worry about is Trade Deficit.

In 9 month of year 2012 trade balance was surplus $ 7,7 billions. Compare to 3 years in  a row the trade surplus turn down significantly from $ 30,9 millions in 2009, $ 30,6 in 2010 and $ 34,8 millions in 2011.
The main reason is price jump quite high in Natural resources, whose share 75% of the export. Eleven years ago export of Natural resources still smal, 40%.

So when the price drop down in 2012 the income value of Natural resourcess drop down as well of 75% of export quantity.

In the other hand, the growth of import continue become bigger and bigger. The increase of import as logic consquences of high economic growth supported by Investment who need Capital goods and raw material also import.

Lets see what kinds of import goods signifanctly increase the import value. Machines, mechanic tools, machine and electric tools, Almost 30% of Non Oil & Gas import are Capital goods. 
Import of vechicles & parts and Planes & parts grow very fast, share 41% of Non Oil and Gas import value.

But don't too worry about increase in Capital goods cause its the indicator of economic growth to increase production capacity that ultimately later will increase export goods as well.

What we worry is about Oil and Gas import, altough Indonesia was OPEC countries. We are recently Net Importer of Oil and Gas, not even compensate any longer with Gas export. This year is the second time deficit after year 2008. Year 2008 relatively small $ 1,4 billions, year 2012 till November jump high to level $ 4,8 millions.

Meantime in some region people screaming of shortage of Oil and in some regions have to be in line for hours to buy oil in Gas stations. Ultimately Goverment ask Parliament to add more quota to import more Oil to fulfil consumption. Oil prices in Indonesia relatively cheap, so consumption increase very fast from time to time.

In 2012 Oil and gas import would be the highest volume more then year 2011 for $ 28,1  more than Capital goods import.

This situation make Government and Central Bank panic and couldn't solve
the problems comprehensively. Year 2014 approaching for election New Government after President Susilo Bambang Yudhoyono run in 2 terms.

The increasing Oil prices is the answer but no one dare gambling to do so, in order not to loose votes in next year election. The possibility is Trade Balance deficit more huge and rate of excange volatile to high over Rp. 10.000,-/US $.
The figure close to economic crisis in year 1998 ago.
Lets wait and see.

Note: Summaries from Kompas, Jakarta daily news, Monday 14, 2012


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