PROCESSING INDUSTRY'S PRODUCTION ONLY GROWS 1.3 PCT

Jakarta, Feb 1 (ANTARA) - Production in Indonesia's big and medium processing industries grew only 1.33 percent in 2009 or declined from the years before, according to the Central Bureau of Statistics (BPS) Monday.

In 2007 production of the industries grew 5.57 percent but dropped to 3.01 percent in 2008 and 1.33 percent in 2009, BPS's chief Rusman Heriawan said.

He said the production growth in 2009 was still positive, likely because producers had shift their export markets to domestic markets.

"Domestic industrial production rose 1.33 percent but exports dropped," he said.

He said this had happened because exports dropped due to weaker imports and they had sold their products to the domestic market, referring BPS' record of a drop in non-oil and gas exports by 9.66 percent.

Rusman said in 2009 the industrial growth was driven by the growth in the cigarette industry that reached 25.46 percent despite an increasing customs tariff, the food and beverage industry by 11 percent and transportation means apart from cars by 4.09 percent.

Industries which were corrected in 2009 were garment industry growing minus 8.12 percent, metal industry apart from machinery and equipment which grew minus 8.12 percent and basic metal industry minus 5.75 percent.

Rusman said the impact of the implementation of the China-Asean Free Trade Agreement was not yet significant.

He said the ACFTA could affect several industries such as garment and textile product industries. However on the other hand it could also open an opportunity for the country's economy especially natural resource exports to grow.

"Indeed textiles, textile products, steel and others are threatened but we have also an opportunity," he said referring to resource based exports such as palm oil.

He said under the free trade agreement that imposes a zero percent duty palm oil exports could be bigger.

He said the ACFTA would also affect positively on inflation because the price of several commodities such as garments would drop.