Trade and economy

In 2005 Indonesia’s exports of goods and services totaled 85,6 billion USD while imports reached 63 billion USD. In the mid-1990s Indonesian workers abroad annually sent home remittances of 449 million USD 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. 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.

In mid-1997 an economic crisis developed in Asia when investors lost confidence in certain debt-laden economies. As the crisis spread to Indonesia, the value of the Indonesian currency plummeted. This threatened the capacity of the government, banks, and businesses to repay their foreign debts. In October the government negotiated an aid package with the International Monetary Fund (IMF).

In exchange for massive loans, Indonesia agreed to implement austerity measures such as reducing government spending and reforming the financial sector. The crisis deepened in 1988 when the IMF halted funds, claiming that the Suharto regime had failed to abide by IMF terms, and as social unrest began to spread. By late May 1998 the economic and social crisis had caused President Suharto to resign. Indonesia was more seriously affected by the Asian economic crisis than were its neighbors. The GDP fell 13.2 percent in 1998 and shrank again in 1999.

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 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.

Trade between Indonesia and Sweden

The trade between Sweden and Indonesia increased steadily until the beginning of the Asian crisis. Sweden’s export to Indonesia was 3,9 billion SEK in 1997. The economical crisis in the end of the 90’s had an especially negative effect on Indonesia and caused a fall the trade exchange with Sweden. A gradual recovery has been seen and especially since President Yudhoyono’s government took over in October 2004.

The Swedish export was 3,3 billion SEK in 2005, which is an increase with 23 percent compared with 2004. The import to Sweden was 1,4 billion SEK during 2005, an increase from 2004 with 12 percent. 

Swedish export to Indonesia consist main of telecommunication equipment, paper and paper pulp, machinery to the paper pulp industry, agricultural machinery and trucks. The import consists of mostly of raw products, furniture, textiles, shoes and products from the food industry. Swedish investments in Indonesia are comparatively limited but companies like SKF, Chubb (Gunnebo) and Swedish Match have production in Indonesia. About 40 Swedish companies have owner interests in Indonesia today. 

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