In January 2014, the trade account fell back into deficit after three consecutive months of surplus (October – December 2013). During 2013, Indonesia balance of trade showed a deficit of USD 4.06 Billion, which constituted a deterioration from a trade deficit of USD 1.66 Billion in 2012. Rising trade deficit in Indonesia in 2013, is largely attributable to the fact that the surplus on trade balance of non oil and gas was smaller than the deficit on trade balance of non oil and gas. On a month-to-month basis, balance of trade registered a decline of 128% from a surplus of USD 1.53 Billion in December 2013 to a deficit of USD 0.43 Billion in January 2014. The condition was by and large caused by a decline in Indonesian exports that was larger than a decline of imports, 14%, and 3%, respectively.

Figure 3: Indonesian Balance of Trade, January 2012 – January 2014 (USD Billion)
Indonesian Balance of Trade fell back into deficit at the beginning of the year

Source: Central Bureau of Statistic and CEIC (2014)

The trade balance of oil and gas deteriorated during 2013. Trade balance of oil and gas which registered a deficit of USD 5.6 Billion in 2012, increased to USD 12.6 Billion in 2013. The deterioration in trade balance of oil and gas in 2013, was largely due to smaller oil and gas exports and higher oil and gas imports in 2013 than in 2012. In the meantime, in December 2013, oil and gas recorded a trade account deficit of USD 0.82 Billion, which increased slightly to USD 1.06 Billion in January 2014. The increase of deficit in trade balance of oil and gas was as a result of a decline of USD 0.9 Billion in oil and gas exports and a smaller decline of oil and gas imports (USD 0.7 Billion).

Oil and gas exports in January 2014 declined. On a month-to-month basis, oil and gas exports declined from USD 3.41 Billion in December 2013 to USD 2.5 Billion in January 2014. The largest decrease (42.1%) affected crude oil exports, followed by exports of oil and gas products, which declined by 23.28% and 16.66%, respectively. Overall, oil and gas exports registered a decrease of 26.7% in January 2014. In December 2013, Indonesian oil and gas imports were valued at USD 4.22 Billion. Nonetheless, in January 2014, the value declined to USD 3.56 Billion (the value of imports declined by 15.7% between December 2013 and January 2014).

Figure 4: Trade Balance of Oil and Gas, January 2012 – January 2014 (USD Billion)
The Trade Balance of Oil and Gas recorded a deficit

Source: Central Bureau of Statistic and CEIC (2014)

Overall, the performance of trade balance of non oil and gas in 2013 is better than in 2012. In 2013, the non-oil and gas surplus was USD 8.57 billion, far larger than USD 3.93 billion registered in 2012, and represented a rapid increase of 118.9%. The rise of trade balance of non oil and gas surplus was largely attributable to a 5.21% decline in non-oil and gas imports or in absolute values, USD 7.78 billion. As regards exports, Indonesian non-oil and gas exports in 2013 showed a decline of USD 3.12 billion compared to the value registered for 2012.

Figure 5: Trade Balance of Non Oil and Gas, Indonesia, January 2012 – January 2014 (USD billion)
Trade Balance of Non Oil and Gas surplus declined in January 2014

Source: Central Bureau of Statistic and CEIC (2014)

Like was the case with the oil and gas trade account (Trade Balance of Oil and Gas), the performance of non-oil and gas trade account (Trade Balance of Non Oil and Gas) deteriorated. At quarter IV-2013, the performance of Trade Balance of Non Oil and Gas had shown a positive trend. But deteriorated later as the decline of non oil and gas exports set in, coupled with an increase in non-oil and gas imports. Consequently, non-oil and gas trade account registered a decline of 73.1% in January 2014. The deterioration is reflected in the dramatic decline in the oil and gas trade account surplus from of USD 2.34 billion in December 2013, to just USD 0.63 billion in January 2014.

The decline in non-oil and gas exports was as result of a decrease in mineral exports. Non-oil and gas exports declined by 11.6% from USD 13.58 billion in December 2013 to USD 11.99 billion in January 2014. Based on month-to-month, BPS data shows that the drastic change affected ores, slag, and ash commodities, which registered a decline of 70.13% during December 2013–January 2014 period, which was in contrast to an increase of 40.18% posted during November-December 2013 period. The same applied to mineral fuels and mineral oil products commodities which declined again by 17.13% in January 2014, larger than 1.27% decline registered in December 2013. Based on Bank Indonesia quarterly report, the decline that affected mineral commodities was in general as a result of the coming into effect of the Act on Minerals and Coal in January 2014. In the meantime, imports of non-oil and gas increased from USD 11.24 billion to USD 11.36 billion in January 2014, which represented an increase of 1.13% from the position in December 2013. Commodities of Elect. machinery, sound react.,tv etc. registered the largest increase of 24.64% (m-t-m).

 

The surplus on goods trade balance registered a drastic increase in quarter IV-2013. The surplus increased from USD 0.2 billion in quarter III-2013 to USD 4.9 billion in the next quarter. The drastic increase in the surplus on goods trade balance is attributable to an increase in the surplus of trade balance of non oil and gas and a decline on the deficit of trade balance of oil and gas. In quarter III-2013, the surplus on the trade balance of non oil and gas, which stood at just USD 2.8 billion, shot up to USD 7 billion in quarter IV-2013. Meanwhile, the deficit of trade balance of oil and gas increased from USD 0.5 billion in the previous quarter to USD 2.2 billion. The increase in the surplus of trade balance of non oil and gas was as a result of Rupiah depreciation during November-December 2013 period, which had an augmenting effect on non-oil and gas commodity exports that saw an increase of USD 4.3 billion in quarter IV-2013. The implementation of Law No. 4 / 2009 on Mining Minerals and Coal and the Ministerial regulation Permen ESDM No. 7/ 2012 in January 2014, increased the surplus on goods trade balance. The decline in the deficit of trade balance of non oil and gas was attributable to two things, namely, an increase in the surplus on the gas trade account and a decline in the deficit on the oil trade account.

Figure 6: Balance of Trade and Income, 2010:Q1-2013:Q4 (USD billion)
The Deficit on the current account shows some improvement

Source: Bank Indonesia and CEIC (2014)

On year-on-year basis, current account position shows some improvement. In the same period in 2012, Indonesian current account registered a deficit of USD 7.8 billion. In quarter IV-2013, the deficit on the current account declined by 48.7% to USD 4 billion. In quarter IV-2013, the performance of current account position registered some improvement. This is reflected in the decrease in the level of the deficit from USD 8.5 billion in quarter III-2013 to USD 4 billion in quarter IV-2013. Improvement in the current account position is attributable to a surplus of goods trade balance and current transfer that was larger than the deficit of service trade balance and income account.

There was no significant change in the balance of service trade balance, income account, and current transfer. In quarter IV-2013, the position of service trade balance, income account, continued to register deficit of USD 2.9 Billion and USD 7.1 Billion, respectively. Compared with the position in the previous quarter, the service trade balance and income account, registered an increase of 7.6% and 3%, respectively. Meanwhile, current transfer account posted a slight improvement from a surplus of USD 0.9 billion in quarter III-2013 to USD 1.6 billion, which represents an increase of 19.6%.

After initially registering a decline in quarter III-2013, capital and financial account begun to show an upward trend in IV-2013. The surplus on the capital and financial account increased from USD 5.6 billion to USD 9.2 billion, which represents an increase of 65.4% quarter-to-quarter. The increase in the surplus is attributable to the drastic change in the components of other investments that occurred in quarter III-2013, which initially was in deficit but moved into a surplus in the following quarter. Direct investment and portfolio investment continued to register a surplus.

The value of direct investment and portfolio investment declined in quarter IV 2013. The largest decrease in direct investment was USD 5.7 billion in quarter III-2013 to USD 1.6 billion in quarter IV-2013. Meanwhile, portfolio investment experienced slight decline from a decrease of USD 1.9 billion to USD 1.8 billion. In percentage terms, the value of direct investment and portfolio investment declined by 71.9% and 9.6% during the period, respectively. The decline in direct investment was a result of an increase in the deficit on direct investment abroad to USD 2.5 billion in quarter IV-2013, far larger than USD 87 million deficit in the previous quarter. Besides, the surplus on foreign direct investment in Indonesia also decreased by USD 1.7 billion compared with the position in the previous quarter.

Other Investments increased drastically in quarter IV-2013. In quarter III-2013 the value of other investments registered a deficit of USD 2 billion, but moved back into surplus of USD 5.9 billion in the following quarter. According to the data from Bank Indonesia, The drastic increase in the surplus on other investments is attributable to withdrawal of bank deposits held offshore and net surplus on private sector liabilities.

Compared with quarter–IV, 2012, the performance of capital and financial account, registered a decline. This is reflected in the value of surplus which was higher in quarter IV-2012 (USD 12 billion), than USD 9.2 billion registered in quarter IV-2013. On year-on-year basis, capital and financial account position posted a 23.1% decrease.

Figure 20: Capital and Financial account position, 2010:Q1-2013:Q4 (USD billion)
Surplus on the capital and financial account, increased

Source: Bank Indonesia and CEIC (2014)

Balance of payments position in quarter IV-2013 improved. This is indicated by the balance of payments position that registered a surplus of USD 4.4 billion in quarter IV-2013. On the contrary, in quarter III-2013, Indonesian balance of payments position plummeted into a deficit of USD 2.6 billion. Improvement in balance of payments was a result of surplus on capital and financial account, and the decline in the deficit on the current account.

Compared with quarter IV-2012, balance of payments position showed slight improvement. In quarter IV-2012, due to a surplus of USD 3.2 billion on the balance of payments, which increased in the same period in 2013 to USD 4.4 billion. On year-on-year basis, the surplus on the balance of payments registered an increase of 36.8%.

Figure 21: Balance of Payments 2010:Q1-2013:Q4 (USD billion)
Balance of payments continued to be in Surplus in quarter IV-2013

Source: Bank Indonesia and CEIC (2014)