Indonesia posts big trade deficit on ore export ban
June 3, 2014, 12:04 am TWN
JAKARTA--Indonesia unexpectedly posted a huge trade deficit in April as a controversial ban on mineral ore exports weighed on Southeast Asia's biggest economy, official data showed Monday.
A jump in imports in the Muslim-majority country ahead of the Ramadan holy month, when people spend more on festivities, also contributed to the deficit of US$1.96 billion.
It was the biggest shortfall since July last year and compared to a US$673.2 million surplus in March, the statistics agency said. Economists had expected a surplus of more than US$200 million.
“Exports fell due to the mineral policy, which caused mineral ore shipments to reach nearly zero,” said agency chief Suryamin, who like many Indonesians goes by one name.
He added that lower palm oil prices had also hit Indonesia, the world's top producer of the commodity, and contributed to the disappointing trade figures.
Indonesia imposed a ban on exports of some unprocessed mineral ores — including bauxite, nickel and copper — on January 12, as well higher taxes on some commodities that can still be shipped.
The move is one of a series of industrial policies pushed by nationalist politicians who argue foreign firms reap an inordinate share of the profits from exploiting resources and business opportunities in the fast-growing economy.
“The nearly US$2 billion deficit practically wipes out the surpluses in the past two months,” Bank Central Asia economist David Sumual told AFP, describing it as “very worrying.”
The trade figures will add to worries about the current account deficit, a major concern of investors last summer when they pulled funds out of Indonesia, prompting heavy falls on the stock market and in the value of the rupiah.
On a more positive note inflation, which surged last year after a hike in fuel prices, was steady in May at 7.32 percent on-year, the figures showed.
And HSBC's purchasing managers index — a gauge of manufacturing activity — rose to 52.4 from 51.1 in April. A figure above 50 indicates growth while anything below points to contraction.