In his speech during the opening of Trade Ministry national working meeting on March 4, 2021, President Joko “Jokowi” Widodo raised several key points which he believed would help boost the country’s trade balance.

Those critical points were, however, left unaddressed because the public focused more on the controversies surrounding President Jokowi’s “hate foreign products” rhetoric.

This article will not discuss the “hate foreign products” remark but focus on other aspects raised during the speech at the State Palace. At that occasion, Jokowi emphasized on the importance of digital trade or ecommerce as one of the economic sectors that need to be carefully developed and well managed in this country.

For that purpose, the President said, the government needs to create a fair and beneficial e-commerce ecosystem that will eventually help develop all business players, particularly the small and medium enterprises (SMEs).

He added digital transformation must always maintain national sovereignty and self-reliance so that Indonesia will not fall victims of unfair practices through digital trade.

President Jokowi’s statement about e-commerce and digital transformation as well as his message on national sovereignty and self-reliance sound cliché. But, that statement was conveyed at the right time when our economy was highly affected by the impact of the pandemic.

As we know, the national economy remained struggling, contracted 2.19 percent in the fourth quarter (Q4) year on year. It was an improvement compared to the condition in Q3 which saw a contraction of 3.49 percent yoy.

The country booked positive result in export, supported by growing export activities in line with an improvement in the export destination countries.

Statistics Indonesia (BPS) recorded US$1.96 billion surplus in the country’s trade balance in January 2021. It was a better performance compared to that in January of the previous years.

In January 2019, for example, the country saw $980 million in trade deficit while in January 2020 the trade deficit stood at $640 million, according to BPS head. The January 2021 trade surplus was apparently because of declining import as a result of lower demands for household goods as well as capital goods due to the pandemic.

So, what the country needs to do to expedite national economic recovery? What measures need to take to jack up export and, eventually, boost trade balance sustainably?

President Jokowi was completely right when he mentioned about the need to work out on digital trade or ecommerce. Since the President is worried about imported products, why not the country develop an ecommerce ecosystem that fully supports export of Indonesian products?

Today, imported products still dominate a number of business lines in the country. Former trade minister Rachmad Gobel, who is also former president director of electronic company PT Panasonic Gobel Indonesia, stated as much as 60 percent of electronic products in the country are imported.

To make it worse, around 70 percent of the electronic products circulating in the country were illegal as indicated in the fact that those products do not come with manual books in Indonesian language as required by the law.

This number is only about electronic products. We have not talked about any other imported products, from food and beverages to other household necessities.

Driving export of Indonesian products is a homework of the government and the private sector alike. We need to identify what commodities or products that we can offer to the global market. We know our major exports are mineral fuel or coal (around 21.3 percent), animal/vegetable fats, oils (7.5 percent), electronic appliances (7.3 percent), footwear (4.1 percent), iron and steel (3.9 percent), among others.

There are also exports of gems/precious stones amounting to 3.7 percent and exports of clothing and accessories that have 2.8 percent of total export share.
While the exports of coal, machinery and electronic products are in the hand of big corporate players, the small and medium enterprises (SME) can play a role in the exports of clothing and accessories as well as footwear and agriculture products.

The question is whether the small players, the SMEs, have the access to anything needed for exports, such as licensing, financing and information regarding verified buyers in foreign countries?

As we have known, a great number of SME players have aspired to become exporters. They have good products and, perhaps, found buyers. However, when it comes to licensing and credit financing, they have to come through frustrating process that may make them so depressed that they quit the process halfway.

The government needs to ensure that these small players will get benefit from the digital trade or ecommerce ecosystem, focusing on cross border activities, to be developed in the country.
Digital trade or ecommerce ecosystem is about providing facilities for business players, especially SMEs players. The ecosystem will also enable them to cut short the lengthy process and avoid unnecessary costs incurred by business players.

Aside from issues of licensing and credit financing, there are also problems related to logistics, shipping and supply chains. Export is not just a “one time” activity. It must be a recurring activity that it can generate revenues (for the SMEs players) sustainably. Thus, better logistics and shipping system as well as finer supply chain must immediately be developed in the country.

Finer supply chain requires assurance that certain product exported to global market should undergo standardized treatment, starting from production, storing to shipment to the country of destination. From point of origin to point of consumption.
We still have a lot of homework to do. The President and any other government officials need not making awful rhetoric that will only cover up real issues concerning trade.

Kurniawan Hari

The writer is head of corporate communication at Madeinindonesia.com. The views expressed are his own.