How to get out of the Commodity Cycle Trap

The Head of the Trade Assessment and Development Agency of the Ministry of Trade, Kasan Muhri, is aware that there is a tendency for commodity price movements to be corrected this year because the commodity supercycle phenomenon is unlikely to last permanently.

"Our strategy to avoid being trapped by the commodity supercycle phenomenon is to increase the volume of manufactured products because the prices of manufactured products are relatively stable," Kasan said yesterday. Commodity prices did make a big contribution to exports throughout 2021. However, he assessed that the contribution of primary commodities to national exports had decreased compared to 2011. At that time, he said, the contribution of manufacturing was only 34 percent of the total export value of US$ 203.5 billion. . Meanwhile, as much as 66 percent of the export value was controlled by primary commodities. “Last year, the contribution of primary commodities had fallen to 52 percent. Meanwhile, manufacturing exports contributed 48 percent," Kasan said. The government has decided to extend the application of luxury sales tax incentives for new cars. Kasan said that the increase in domestic sales after the incentives will be followed by an increase in automotive exports. Thus, exports of other manufactured products will also be boosted. "Because, if you only increase the volume of primary commodities, when prices fall, the value of exports will also decrease," he said. There are several manufactured products whose export value can still be boosted. This potential can be seen from the still minimal contribution of Indonesia's exports in the global market. For example, the market share of Indonesian textile products in the world is only 1.7 percent; metal 2 percent, paper 2.8 percent; footwear 3.9 percent; and 2.4 percent of furniture. The Indonesian automotive market share is only 0.5 percent of the market potential of US$ 1.2 trillion.

|•SOURCE•| Articles :TEMPO | Image :MERDEKA |

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