BPS: Beware of Consumer Goods Imports from China Amid Yuan Devaluation

KATADATA ? Statistics Indonesia (BPS) expects imports from China to increase in the next few months due to Yuan devaluation. In July 2015, imports from China account for 24.04 percent of Indonesia?s total imports.

Deputy Chief Statistician for Production Statistics of BPS Adi Lumaksono said that the effect of China?s Yuan devaluation will be felt in the next few months. This is especially true for the imports of capital goods and raw materials. It?s because the government will boost infrastructure projects in the third quarter that require imported raw materials and capital goods.

?China?s move to devalue Yuan is to improve its export competitiveness including to Indonesia. Imports (from China) account for nearly 25 percent and is expected to increase in the near future,? he said Tuesday (8/18) in Jakarta.

According to Adi, the increase in the imports of capital goods and raw materials are considered normal. It?s because there are not many domestic industries that produce subsitutes for those imported goods. The government, however, needs to be cautious if Yuan devaluation causes the imports of consumer goods such as laptops and cell phones to increase.

Indonesia?s  import value in July 2015 reached US$10.08 billion or down by 22.4 percent than the previous month. Cumulatively, the country?s import value from January to July 2015 reached US$84 billion or down by 19.2 percent compared to the same period of 2014. Three countries that recorded the highest non-oil and gas imports for the period January-July 2015 were China with a total value of US$16.5 billion (24 percent), Japan of US$8 billion (11.7 percent), and Singapore of US$5 billion (7.3 percent).

Non-oil and gas import value from China for the period January-July 2015 was slightly decreased by 4.64 percent during the first seven months of this year. The largest decline in non-oil and gas imports for the period January-July 2015 was Japan of 19.7 percent, Singapore of 16.9 percent and Thailand of 16.6 percent.  Indonesia?s trade deficit with China for the period January-July 2015 was US$8.7 billion.