Prospects of Indonesia Exporting Products to China in the Pandemic COVID-19

Pandemic of COVID-19 posed a major challenge to Indonesian economy. Indonesia positive economic growth grew 5.02 percent in 2019 then changes drastically in 2020. This pandemic has made difficulties to goods transportation access from Indonesia to the countries that become the main market share of Indonesians export products. One of Indonesia's biggest export markets is China. Many products have been exported to China. In 2019 Indonesia participated in The 2nd China International Import Expo (CIIE) in Shanghai, China (Warta Ekonomi, 2019). Through participating in this exhibition Indonesia had purposes to increase exports to China by utilizing the openness of China market. At that time Indonesia was exhibiting non-oil and gas products such as palm oil, biofuel, coffee, tea, swallow's nests and others. The value of trade between Indonesia and China reached US $ 72.7 billion in 2018, making China became the largest trading partner of Indonesia in that year. In 2019, Indonesia and China recorded trade value reaching US$ 45.9 billion in January-August period dominated by mineral fuels (Databoks, katadata.co.id, 2019)

There was a trend of slowing down of export activities during the COVID-19 pandemic. Indonesia's export level in May 2020 was stated to be at the lowest level since 2016 said by BPS Chief, Suhariyanto (Tirto.id, 2020). Indonesia's exports in January stood at US $ 13 billion, and was still increasing to US$ 14 billion in February-March, but began to decline in May 2020 to US$ 10.53 billion. Prices from China’s producers and consumers at pandemic have decreased, indicating that Indonesian export goods had not absorbed well into Chinese market that had caused deflation. China controls 17.04 percent of Indonesia's export share and this is a big hit to Indonesian economy.

The problem of export declining is not only experienced by Indonesia, but occurs globally. This happens because almost all countries in the world have experienced COVID-19 pandemic. When countries are still focused on health issues and many state budgets are spent on dealing with COVID-19, then budgets for other economic activities will be cut. The attention of the government is also more directed to dealing with the health crisis. Although some countries have implemented new normal, economic activities are not fully opened because the government is still watching if this new normal will cause a second wave of the COVID-19 pandemic.

Although Indonesia has experienced a decline in the number of exports to China, there are still a number of products that have increased despite slight increases. For example, wood products, arwana fish, food products and tropical fruit. The Indonesia’s export value of forest products to China from January to May increased 1 percent from the same period in 2019. In 2020 the value of it reached US $ 1,143 billion. Forest products which increased to China are plywood - paper products from forest plants, chipwood - and woodworking. (Republika.co.id, 2020) Exports of processed foods also increased because more Chinese people chose to buy processed foods because they were afraid to eat in restaurants (Katadata.co, en, 2020). The most popular processed foods include instant noodles, aloe vera drinks and other instant products. In addition, exports of exotic tropical fruit increased to China such as mangosteen. But in the future the government hopes that this agricultural commodity can have added value from fresh fruit into mangosteen extract.

Closing aviation access and shipping goods to and from China raises export problems for Indonesia. Especially for fruits and other fresh foodstuffs that are very much affected. Until now, Indonesian export shipments can only be done by sea because the air routes have not been opened. Besides that, other ASEAN countries also showed their interest in exporting their products to China during the COVID-19 pandemic. For example, Thailand can take the land route to China that makes this country easily to reach China. Process of shipping of Indonesia product to China when the airways are still closed also affected the quality of the goods when they reach China.

The Indonesian government is making efforts to overcome the problem of Indonesia's exports, one of which is by simplifying the rules of export restrictions or trade procedures to ensure the smooth flow of goods. The Government of Indonesia also facilitates virtual business matching activities (Press release.kontan.co.id, 2020), the utilization of international cooperation forums, and the issuance of Certificates of Origin (SKA) for export goods taken by the government to increase export opportunities. Social restrictions because of COVID-19 pandemic in almost all countries have hampered trade activities. Indonesia Trade Attaches and Indonesia Trade Promotion Center (ITPC) find difficulties in conducting trade promotions, gathering buyers or establishing trade cooperation. So that exploiting the potential demand from China is Indonesian government's effort to encourage Indonesian exports to China. In the future, Indonesian government needs to boost virtual activities and think about transportation efforts to China to increase exports of products from Indonesia during the COVID-19 pandemic.