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Indonesia Direction of Trade
In the early 1990s, Indonesia's trade partners included
dozens
of countries throughout the world. Imported goods came
from markets
as near as Singapore, one of the newly industrializing
economies
(NIEs) of Asia, and as far as Europe and the Middle East
(see
table 21, Appendix). Japan and the United States were the most
important
suppliers, together accounting for a 37 percent of imports
in the
late 1980s. The growth in Indonesia's manufactured
products
contributed to a growing diversity of export markets.
However, the
importance of oil and liquefied natural gas in total
exports gave
Japan, the major market for these natural resources,
predominance
among export destinations (see
table 22, Appendix).
In 1990 more than 70 percent of exports to Japan were
crude
petroleum, petroleum products, and natural gas, which
represented
67 percent of all petroleum exports and 75 percent of all
natural
gas exports from Indonesia. Although Japan was also an
important
market for agricultural and manufactured goods, the
markets for
these products were more diversified among Indonesia's
many trade
partners. Half of Indonesia's natural rubber and one-third
of its
clothing exports were exported to the United States.
One-third of
Indonesia's plywood products was exported to Japan, but
significant
shares also were exported to the United States, the
Republic of
Korea (South Korea), Taiwan, and several European nations.
The government participated in several initiatives to
expand
and diversify export markets. In 1991 the Department of
Trade
organized a mission to China, a country with which
economic ties
had been effectively severed from 1965 until the late
1980s.
Recorded exports to China were 3.2 percent of Indonesia's
total
exports in 1990 (although this measure may not have
indicated a
genuine increase in trade as before 1990 Indonesian
products were
shipped to China via Singapore and Hong Kong). Compared
with trade
with other trade-partner nations, 3.2 percent ranked the
China
trade close to countries such as the Netherlands and the
Federal
Republic of Germany (West Germany) but ahead of all ASEAN
partners
except Singapore. Relations with China warmed after the
trade
mission and greater overall trade was anticipated.
ASEAN was founded in 1967 to promote economic
integration among
the nations of Indonesia, Singapore, Thailand, Malaysia,
and the
Philippines, and later Brunei. Early efforts of this group
included
an industrial projects agreement signed in 1976 to
establish
several large-scale industrial projects jointly owned by
member
governments, and the 1981 Industrial Complementation
Scheme
designed to coordinate the production of components for
manufactured products, such as automobiles, among ASEAN
members. In
1992 a major trade accord--the Common Effective
Preferential
Tariff--proclaimed that an ASEAN Free Trade Area (AFTA)
was to be
established in January 1993 and result in a gradual
reduction in
tariffs on manufactured goods to a maximum of 5 percent by
2008.
The initial measures listed fifteen categories of
manufactured
goods, including plastics, fertilizer, wood pulp, glass
products,
electronics, and wooden furniture, that would have a
uniform tariff
of no more than 20 percent within eight years. The
Asian Wall
Street Journal reported in early 1992 that significant
loopholes in the trade accord, such as permission for
individual
countries to exclude certain products from tariff cuts,
could
dilute its impact. In addition, Indonesian won a delay of
fifteen
years in implementation.
Data as of November 1992
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