COAL IN INDONESIA

COAL’S SLIDE POSES BROADER RISKS FOR INDONESIA

Wayne Arnold

Reuters, September 11, 2012

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Coal’s slide poses a problem for Indonesia. As the biggest exporter of coal used for generating power, the country’s fortunes might seem directly tied to China and India’s economic slowdown. In fact, exports account for only a sliver of GDP. The bigger risk is that falling demand spooks foreign investors, undermines a provincial boom, and hurts poor workers.

It’s tempting to see coal as king in Southeast Asia’s largest economy. Indonesia exported 309 million metric tons of the stuff in 2011, according to the World Coal Association, making it the world’s largest exporter of the thermal coal that powers Chinese and Indian power. Slowing demand meant Indonesian coal exports fell 13 percent from May to June.

However, the link to Indonesia’s economic fortunes is not straightforward. Coal accounts for only about 14 percent of Indonesia’s exports and 4.4 percent of GDP. A 30 percent increase in foreign direct investment in the second quarter suggests the country’s growing population and rising incomes remain compelling.

(...) [artículo aquí]