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International Trade Law
Growth in Indonesia’s trade has been relatively stagnant in the years since the Asian recovery, and the value of exports and imports has roughly kept pace with prices. Even the 33 percent nominal growth from 2004 to 2005 was due more to price increases in primary commodities than to growth in volume, indicating no real improvement in the competitiveness of Indonesian exports.
While the composition of exports has shifted only marginally in recent years, the most significant change has been a reduction in manufactured goods from 54.1 percent of exports in 2002 to 46.9 percent in 2005, as Indonesia has faced increasing competition in labor-intensive industries, such as textiles, clothing, and footwear, from China and Vietnam.
Over the same period, Asia’s share of Indonesia’s imports and exports has grown (to 67 percent and 68.3 percent, respectively) as the share of Europe and the United States has fallen. Japan remains Indonesia’s largest export market, at over 21 percent of merchandise exports, while Singapore has surpassed Japan as the largest source of Indonesia’s imports (16.4 percent). Trade is not growing among ASEAN countries, although there is significant potential for such growth if ASEAN countries take measures to harmonize policies and procedures in the region.
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