Export promotion in Indonesia

This country study (part of a regional study of export and investment promotion in Asia) assesses the effectiveness of export and investment promotion services in Indonesia, and in particular A.I.D."s $10 million Private Sector Development Project, which struggled over a period of 7 years with various approaches to direct assistance for export and investment promotion. The report reflects the perspectives of both service providers and firms that benefitted from the services and reaches the following conclusions. (1) Policy reform was an important precondition to the development of an indigenous export capability; through the 1980"s A.I.D. assistance in deregulation effected greater change in Indonesia"s economic environment than did direct A.I.D. assistance to individual firms. (2) Government-subsidized export promotion programs, which included buyer contacts, trade fairs, and the provision of general market information, were most helpful at early stages of firm market entry (later stages required more technical and market sensitive expertise). Government-managed investment promotion had no impact. (3) For market assistance, the majority of firms rely on internal resources and on highly interrelated seller/buyer relationships, rather than on fee-based advisory services. The report is presented in three sections which cover the economic context, the export promotion services market, and the effectiveness of export promotion intermediaries.