WorldCity, Annual Report: No. 18 Indonesia- Tapping tariff relief | Connecting Local Business Leaders To The Global Economy

Annual Report: No. 18 Indonesia- Tapping tariff relief

July 9th, 2006

Even with a one-two punch from natural disasters, Indonesia has hung onto its energetic trade with Georgia.

Despite a string of deadly natural disasters in Indonesia, including the tsunami in 2004 and the earthquake in 2005, this Asian country has kept up a vibrant commercial relationship with Georgia.

In 2005, bilateral trade between the state and Indonesia jumped more than 30 percent to top $1 billion.

Georgia’s imports from the archipelago rose 32 percent to end the year at $788 billion, while exports rose nearly 29 percent to reach almost $230 million.

Much of the growth has come from commodities that were given preferential tariff treatment following the devastating tsunami, including contact lenses and plywood.

Indonesia has a growing contact lens manufacturing sector and Georgia imported more than $148 million in lenses in 2005. That reflected a nearly 26 percent increase from a year earlier and made contact lenses the state’s top import from Indonesia for the year. Atlanta-based CIBA Vision, the eye care unit of Novartis, has a manufacturing plant in Indonesia.

Although contact lens imports posted double-digit growth, the state’s No. 2 import from Indonesia – natural rubber – saw an even more impressive gain, rising 144 percent. Rubber imports closed the year at more than $103 million.

And shrimp imports helped offset the shortfall felt by the United States after hurricanes devastated the Gulf Coast shrimp industry. Those imports gained by 264 percent to close the year close to $14 million.

Plywood imports, responding to the robust growth in construction, were also up – by nearly 47 percent – to almost $25 million. Those imports supply growing demand for construction materials.

Apparel also played a role in the trade exchange. The Indonesian Ministry of Industry said the country ranks third behind China and India as a global provider of clothing. Some U.S. companies that might otherwise have relied on Chinese clothing imports in 2005 switched to or expanded operations in other nations in Southeast Asia as a way to avoid cargo quotas placed on Chinese-made shipments.

Georgia imports of women’s lingerie from Indonesia, including bras, girdles and garters, exceeded $62 million, a gain of 19 percent for the year. The state also imported more than $22 million in women’s suits, $20 million in men’s suits, $17 million in men’s shirts and $15 million-worth of sweaters in 2005.

The textile industry affected trade in both directions. Although much apparel manufacturing has been exported overseas, Georgia still supplies raw materials for the sector. Cotton, for example, was Georgia’s top export to Indonesia. Although cotton exports reached $35 million, this was a 4 percent drop from 2004. However, shipments of artificial threads rose, climbing more than 20 percent to close the year at nearly $17 million.

Meanwhile, Georgia exported nearly $22 million in kaolin clays to Indonesia, along with more than $15 million in tractors. That compares with just more than $6 million-worth of tractors in 2004.

Exports of heavy construction machinery also took a leap in the year following the tsunami. Nearly $8 million in construction equipment from Georgia was sent to Indonesia, up from just $2.9 million in 2004.

According to a post-tsunami report by the United Nations Food and Agriculture Organization, Indonesia was the nation hardest hit by the tsunami that slammed 11 countries in Southeast Asia. An estimated 126,000 people were killed in Indonesia and the U.N. agency estimates that 600,000 people – a quarter of Indonesia’s working population – were left jobless immediately after the disaster.