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Economy, Foreign Trade

ASEAN Free Trade Area, metal ores, Association of Southeast Asian Nations, trade restrictions, Asia-Pacific Economic Cooperation

In 2000 Indonesia’s exports of goods and services totaled $62.1 billion, while imports reached $33.5 billion. In the mid-1990s Indonesian workers abroad annually sent home remittances of $449 million, reducing Indonesia’s current account deficit. This figure declined during the Asian economic crisis of the late 1990s, when Indonesian workers in neighboring countries such as Malaysia were sent home. Historically, Indonesia has had very small trade deficits, in large part because of its petroleum exports; in recent years, however, it has relied increasingly on a rise in exports of manufactured goods.

In the 1960s and 1970s state-owned trading companies had an important role in Indonesia’s import and export trade, but their influence declined in the 1980s as the government eased some trade restrictions as part of wider economic reforms. During Suharto’s rule, private companies—usually connected to the president’s family—were given exclusive control over some lucrative trading goods, such as cloves. The more notorious of these special arrangements were abolished after Suharto’s resignation. In the 1990s important exports included petroleum and petroleum products, natural and manufactured gas, wood and wood products (particularly plywood), food products, textiles, metal ores, footwear, and electrical and electronic products. Agricultural exports included rubber, palm oil, coffee, spices, tea, cocoa, tobacco, and sugar. Indonesia’s main imports included machinery, transportation and electrical equipment, chemical products, and minerals. The country’s main trading partners for exports are Japan, the United States, Singapore, South Korea, Taiwan, China, and Hong Kong. The main partners for imports were Japan, the United States, South Korea, Germany, Singapore, Australia, and Taiwan.

Indonesia has been a member of the Association of Southeast Asian Nations (ASEAN) since its formation in 1967. The country also belongs to the ASEAN Free Trade Area (AFTA), which was declared in 1992. Under the AFTA agreement, Indonesia must reduce its tariffs on many imported goods to 5 percent or less by 2003. Indonesia is also a member of the Asia-Pacific Economic Cooperation (APEC) organization, which draws together countries from both sides of the Pacific, including the United States and Japan. APEC is also working toward a reduction of trade tariffs among its members.

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