Halal products, environmentally friendly products and sustainable products are starting to be popular with the global community. Global trade has also experienced an extraordinary transformation in the last few decades.

Jakarta (Indonesia Window) – Halal products, environmentally friendly products and sustainable products are starting to be in demand and are becoming favorites of the global community.

Such a fact becomes both a challenge and an opportunity for Indonesian businesspeople in 2024, Acting Head of the Trade Policy Agency at the Indonesian Trade Ministry, Didi Sumedi, made the remarks when opening the Gambir Trade Talk at the Aryaduta Hotel, in Indonesia’s city of Bandung, West Java province on Thursday (Nov. 22).

The Gambir Trade Talk is one of the policy dialogue forums carried out regularly by the agency to support the formulation of policy recommendations at the Ministry of Trade.

"Changes in the global supply chain map and various conflicts currently occurring are also affecting Indonesia's trade in national and global markets," Didi said.

The event has the theme 'Indonesia's Foreign Trade Outlook in 2024', according to the Indonesian Trade Ministry in a written statement quoted by Indonesia Window on Saturday.

“Halal products, environmentally friendly products and sustainable products are starting to be popular with the global community. Global trade has also experienced an extraordinary transformation in the last few decades," Didi explained.

The shifting role of developed countries and the economic growth of developing countries have also opened up greater trade opportunities, he noted.

The Trade Ministry focuses on exporting goods and services with high added value to increase economic productivity and support the increase in export performance in 2024 among others through a policy to sharpen the export competitive edge in supporting the sustainable economy.

"The Ministry of Trade will increase exports of value-added and sustainable products through trade promotions, strengthening export information, encouraging export downstream policies, green trade policies, as well as policies providing export facilities," he said.

"Efforts to take opportunities and face future challenges certainly require cooperation and collaboration from all parties, including academics and business players," Didi said.

Referring to the results of the 2023 Ministry of Trade Working Meeting, non-oil and non-gas exports in 2024 are targeted to increase by 3.3-4.5 percent year-on-year (YoY) and have a trade balance surplus of 22.5 billion U.S. dollars.

However, taking into account current global economic challenges and estimates of economic and trade growth in 2024, Indonesia's export growth and trade balance surplus in that year are expected to grow lower than the target that has been set.

Referring to projections from Tradingeconomics.com, Indonesia's exports in the fourth quarter of 2023 are expected to increase. With the increase in the fourth quarter, the decline in Indonesia's total exports in 2023 is expected to decrease to 9.7 percent YoY.

Meanwhile, in 2024, Indonesia's total exports are expected to reach 306 billion dollars (up 16.12 percent YoY). Meanwhile, Indonesia's total imports in 2023 are expected to decrease by 7.7 percent.

Indonesia's imports are expected to reach 234.37 billion dollars (up 6.93 percent YoY) in 2024.

Didi further said, the Gambir Trade Talk as the final edition in 2023 took the theme 'Indonesia's Foreign Trade Outlook 2024' in response to uncertain global economic amidst various geo-political conflicts and tensions.

"Thank God, amidst various global dynamics, the Indonesian economy continues to grow by 4.94 percent YoY in the third quarter of 2023. The trade sector is one of the drivers of this growth, supported by trade in cars and motorbikes as well as wholesale and retail trade," Didi explained.

In terms of foreign trade, a shift in Indonesia's main trading partners has begun to occur. In the January-October 2023 period, India became Indonesia's main trading partner which recorded the largest non-oil and non-gas trade surplus reaching 11.54 billion dollars, followed by the United States and the Philippines.

Meanwhile, the main products contributing to the largest surplus are mineral fuels, CPO, and iron and steel.

The Ministry of Trade noted that Indonesia's trade balance has also maintained a surplus trend since May 2020 or for 42 consecutive months.

In the January-October 2023 period, Indonesia's trade balance posted a surplus of 31.22 billion dollars.

Even though it is still experiencing a surplus, Didi said, Indonesia's foreign trade performance would decline in 2023.

In the January-October 2023 period, Indonesia's exports amounted to 214.41 billion dollars, down 12.15 percent compared to those in the January-October 2022 period.

"The causes of the decline in Indonesia's export performance include the decline in prices of several world commodities which are Indonesia's main export products as well as a decline in demand in Indonesia's main trading partner countries. However, Indonesia's exports in volume are still increasing," Didi explained.

World non-energy commodity prices reached their highest figure in April 2022 and continued to drop until October 2023 with an average downward trend of one percent per month.

Several commodities experiencing a downward trend in prices include coal, CPO, rubber, aluminum, iron ore and nickel. Meanwhile, import demand from major trading partners such as China, Japan, India, Vietnam, Singapore and South Korea also experienced a decline in the January-October 2023 period.

Present at the Gambir Trade Talk were the Head of the West Java Province Industry and Trade Service Noneng Komara Nengsih, the International Trade Agreement Committee of the Indonesian Employers' Association Mufti Hamka, Executive Director of CORE Indonesia Mohammad Faisal, Next Policy Co-Founder Fithra Faisal Hastiadi.

In his presentation, Fithra Faisal said that a trade surplus has the potential to slow down economic growth. According to him, controlling inflation in a country is very crucial, especially in the food sector.

Fithra also appreciated the government's policy of placing a moratorium on exports of several production inputs.

Mufti Hamka outlined a number of successful strategies in foreign trade. First is overcoming challenges by diversifying markets, adapting regulations, and innovating products and services.

Second is taking advantage of opportunities. Third is developing a strategy to improve trading performance. Fourth is developing human resources. Fifth is responding to global trends, such as sustainable and environmentally friendly trends and adopting technology or digitalization and sixth is managing risks carefully.

Meanwhile, Mohammad Faisal responded to the policy with several notes. According to him, Indonesia must strengthen efforts to diversify export destinations and import origins and create policy breakthroughs related to increasing protection in partner countries.

Faisal also recommended that the government create a policy mix to maintain domestic consumption, such as maintaining food inflation, creating jobs, providing incentives for Micro, Small and Medium Enterprises (MSMEs), and optimizing social protection programs.

He also considered it important to accelerate the growth of services exports. The Gambir Trade Talk is expected to be a brainstorming forum regarding the picture of global and national trade opportunities and challenges in 2024, including getting inputs on ideas regarding anticipatory steps that need to be taken.

Inputs from sources and participants are expected to enrich policy options in order to help the government, especially the Minister of Trade. The Gambir Trade Talk was attended by 250 participants consisting of ministries/institutions, business players and academics.

Reporting by Indonesia Window