Indonesia 2011 Exports Growth May Top 20% On Average -Minister

Indonesia's 2011 exports may grow more than 20% on- year on average if there is no sharp downturn in the global economy, the Southeast Asian nation's trade minister said on Saturday.

"It looks like it could be higher than 20%. Our target is 12% to 16%. If you look at up to May it is still growing at above 20%," Mari Elka Pangestu told Dow Jones Newswires in an interview.

She, however, said there were some concerns over growth slowing down in China and India, adding, "if that happens, then, of course, the second half of the year may not look as good. Commodity prices are also a bit soft."

In May, the country's exports, which were boosted by global commodity demand, rose to an all-time high of $18.33 billion, up 45.3% from a year earlier. Exports stood at $16.52 billion in April. The country's imports reached $14.83 billion in May, slightly lower than $14.89 billion in the previous month.

The minister said that, apart from the high global commodity demand and prices, the country's exports were also being supported by relocation of many labor-intensive production facilities from other countries to Indonesia, as the manufacturers seek to benefit from the lower wages in the country.

"What used to be exported from China, some of it now is being exported from Indonesia because of the relocation of a number of labor-intensive production [ facilities], such as footwear and garments," Pangestu said.

The country has also been in favor when it comes to foreign direct investments. With the economy expanding at more then 6% a year recently, Indonesia has attracted billions in investment.

In 2010, the company was a benefactor of investments of $16.2 billion, Pangestu said, adding that the FDI is expected to grow 9% this year.

She said Indonesia is an attractive market for consumer and retail sectors due to its large population. "We are trying to develop a lot of infrastructure, and it is a growing market," she said.

Indonesia, which is the world's biggest palm oil producer, is also looking to change how it taxes its palm oil products as it seeks to grow its downstream industry. The country currently sets a progressive tax system on the commodity based on price movements on the international market.

The minister said that the government has finalized changes to the crude palm oil export tax system, which will include a higher duty on exports of crude palm oil than on refined palm oil products.

"It will continue to be progressive. What we would hope should happen is that it is a signal that we would like to see more processing being done in Indonesia," Pangestu said, declining to provide details on the changes to the tax structure. Source: Nasdaq