Research Note 5 1999-2000

Australia's Trade with Indonesia

Gerard Newman
Andrew Kopras
Statistics Group
21 September 1999

Background

The Republic of Indonesia is one of Australia's main trading partners. In 1998-99 Australia's exports to Indonesia were worth $2200m, our tenth most important export destination. Australia's imports from Indonesia were worth $3272m, our eighth most important source of imports. From Indonesia's perspective, Australia is also an important trading partner. In 1998 Australia was Indonesia's ninth most important export destination and fifth most important source of imports. However, although Indonesia is an important trading partner, particularly in regard to certain commodities, it should be borne in mind that only 2.66 per cent of Australia's exports are destined for Indonesia and 3.35 per cent of our imports are sourced from Indonesia.

Australia's trade with Indonesia has grown dramatically in the last ten years, reflecting the rapid growth in the Indonesian economy (at least until the Asian economic crisis). As well as the rapid growth in trade there has been a significant turn around in the balance of trade between Australia and Indonesia.

Table 1 Australia's Trade with Indonesia

	Exports	Imports	Trade Balance
	$m	$m	$m
1988-89	762	419	343
1989-90	1 030	441	589
1990-91	1 462	784	678
1991-92	1 627	995	632
1992-93	1 715	1 305	410
1993-94	1 906	1 105	801
1994-95	2 113	1 198	915
1995-96	2 716	1 522	1 194
1996-97	3 305	1 864	1 441
1997-98	2 751	2 868	- 117
1998-99	2 200	3 272	- 1 072

Until the last two years Australia has enjoyed a healthy trade surplus with Indonesia. However, the Indonesian economic downturn has resulted in a decline in Australia's exports to Indonesia and a resultant deficit in the balance of trade (see Table 1). The balance of trade is now heavily in Indonesia's favour with a trade surplus of $1072m in 1998-99.

Commodities

Although the aggregate value of Australia's trade with Indonesia is quite high the significant feature of our trading relationship is in the importance of the trade to a number of commodities.

Indonesia is a significant destination for Australian exports of wheat, cotton, specialised machinery, civil engineering equipment, other manufactures of base metal, crude petroleum, aluminium and zinc. On the other hand Indonesia is an important source for Australian imports of crude petroleum, textile yarn, paper and paperboard, paper manufactures, furniture and footwear. The table on the reverse page provides details of the main commodities exported to and imported from Indonesia for the last three years.

Some notable features of Australia's trade with Indonesia are:

• There is a significant two-way trade in crude petroleum. Australia imported $1242.9m worth of crude and exported $93.4m worth in 1998-99.
• The value of Australian exports of wheat is not available for publication for confidentiality reasons(1) (it is included in the confidential trade item) but is estimated to be around $400m in 1998-99.
• There has been a dramatic fall in the value of live animal and beef exports in the past two years as a consequence of the depreciation of the Indonesian Rupiah (making meat more expensive) and the fall in consumption due to the economic downtown.
• In the last two years there have been significant imports of jewellery and non-monetary gold from Indonesia reflecting a 'flight of capital' from the country by wealthy Indonesians.(2)

1. The value of sales of wheat by the Australian Wheat Board to Indonesia are commercial-in-confidence and not available for publication,
2. Sydney Morning Herald, 9 September 1999, p.3T.

Australian Trade with Indonesia, 1996-97 to 1998-99

$ million

Code	Commodity	1996-97	1997-98	1998-99
Exports
001	Live animals	237.8	75.9	39.5
011	Meat of bovine animals, fresh, chilled or frozen	56.6	29.5	18.5
022	Milk and cream	54.2	37.8	49.3
046	Meal and flour of wheat and flour of meslin	0.1	0.1	12.2
251	Pulp and waste paper	10.0	11.5	16.1
263	Cotton	346.3	382.1	524.7
333	Crude petroleum	215.9	213.6	93.4
334	Refined petroleum	22.3	15.2	16.7
522	Inorganic chemical elements	13.2	12.3	20.2
575	Plastics, in primary forms, nes	18.1	11.7	12.1
651	Textile yarn	9.9	12.7	15.8
672	Ingots of iron or steel	61.2	39.7	27.6
682	Copper	83.1	39.2	17.7
684	Aluminium	148.0	109.9	117.1
685	Lead	34.8	19.8	15.5
686	Zinc	79.9	66.5	65.3
699	Other manufactures of base metal	32.1	56.3	53.1
723	Civil engineering equipment	34.2	34.2	45.1
728	Specialised machinery	47.1	55.8	28.8
782	Motor vehicles for the transport of goods	9.4	4.4	18.3
784	Motor vehicle parts	17.4	10.6	12.1
931	Special transactions	17.7	14.1	12.8
	Confidential items	795.1	839.4	552.8
	Other commodities	960.9	658.4	415.2
	Total Exports	3 305.3	2 750.7	2 200.1
Imports
248	Wood, simply worked	29.0	29.5	29.4
251	Pulp and waste paper	4.4	6.0	31.8
333	Crude petroleum	869.3	1 042.2	1 242.9
574	Polyacetals primary	5.3	35.8	48.3
634	Veneers, plywood and particle board	25.2	30.0	26.0
635	Other wood manufactures	21.9	30.6	37.6
641	Paper and paperboard	41.0	73.1	118.5
642	Paper manufactures	45.2	56.5	100.0
651	Textile yarn	63.4	61.8	56.1
653	Woven synthetic fabrics	26.7	29.6	30.7
657	Special yarns and textile fabrics	16.4	16.4	25.5
664	Glass	8.6	15.4	22.8
681	Silver, platinum and other metals of the platinum group	0.0	20.4	23.2
752	Automatic data processing machines & units thereof	11.0	14.8	27.5
762	Radio-broadcast receivers	18.0	28.2	20.3
773	Equipment for distributing electricity	4.7	26.0	31.0
778	Other electrical machinery	16.9	22.9	29.0
821	Furniture	55.1	71.8	81.4
841	Men's or boys', clothing (not knitted)	15.3	19.7	21.9
851	Footwear	40.6	45.2	44.6
897	Jewellery	1.3	241.1	175.0
971	Non-monetary gold	0.1	338.7	419.4
	Confidential items	15.0	25.9	42.8
	Other commodities	529.6	586.8	586.7
	Total Imports	1 864.0	2 868.4	3 272.3

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