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Indonesia lays out new trade policy

20141114

Indonesia lays out new trade policy

After a series of bilateral meetings with several major trade partners, Trade Minister Rachmat Gobel has changed the course of the country’s foreign trade diplomacy, hinging not only on measures to climb up value chains but also on attempts to lift more than 35 million Indonesians out of poverty. During Indonesia’s bilateral meetings with Malaysia, Hong Kong, New Zealand, Singapore, Australia and Russia on the sidelines of the Asia-Pacific Economic Cooperation (APEC) in Beijing, Rachmat underscored how important it was for those countries to acknowledge that Indonesia was still a poor country. “I’ve told my counterparts that Indonesia, like India, is still a poor country that needs to be assisted in order to lift some 35 million people out of poverty. Although we’re considered to be among the middle-income countries, a large part of our population is still prone to falling back into poverty,” said Rachmat recently. “Hinging on that conclusion, our trade policies should be in line with our efforts to resolve that problem. But that does not mean that we’re erecting trade barriers that may potentially violate international rules,” continued Rachmat. According to Rachmat, President Joko “Jokowi” Widodo’s maritime-axis doctrine would channel trade policies into providing incentives for investment in the maritime and agriculture industries as well as improving the nation’s industrial competitiveness. “Sectors related to food security will be prioritized to get any incentives and benefits that the government can provide,” he said. Unlike his predecessors that had less experience in managing manufacturing companies, Rachmat may use his manufacturing expertise — developed over the years while managing companies linked to Japan’s electronics giant, Panasonic — to inform his trade policy. “I am most concerned with making our industrial products competitive in the international market. We should think of ways to make our industries highly efficient,” he said. Rachmat has also responded cautiously to any future free trade proposals, including China’s recent initiative to revive the idea of the long-touted Free Trade Area of the Asia Pacific (FTAAP). “Indonesia has responded cautiously to the FTAAP proposal. It should undertake a meticulous study before agreeing to move forward,” he said. China brought up the idea of pursuing a deal to move forward with the FTAAP during the APEC summit, while the United States was pushing for the completion of its 12-nation Trans-Pacific Partnership (TPP), which excludes China. Indonesian Chamber of Commerce and Industry (Kadin) deputy chairman Chris Kanter, who advises Rachmat on various trade issues, said that Indonesia’s market was too open to the inflow of foreign goods. “I think there should be a freeze on FTA [free trade area] deals. There is too much homework related to our efforts to boost our competitiveness. I think this should be the main focus,” he said. President Jokowi said late Monday that he had expressed his concerns to several world leaders, including US President Barack Obama, over the difficulties that some Indonesian agricultural and fisheries products were facing when entering overseas markets. “We don’t want to enter into any discussion on free trade deals. We don’t want to open up unless there is something we can gain,” he said. “Many of our commodities such as rattan, palm oil and fish have fallen victim to trade restrictions. These are not commodities produced by big corporations. These are from our farmers and small companies,” said Jokowi. Trade Ministry’s bilateral meeting outcomes * Malaysia - Reactivate joint trade and investment committee (JTIC) that focuses on the welfare of people living along the the borders. - Agreement to meet on International Tripartite Rubber Council (ITRC) on Nov. 20 in Kuala Lumpur. * Hong Kong - Indonesia will be able to use Hong Kong’s network in developing small and medium enterprises and for distribution and logistical points for Indonesia’s exports. * New Zealand - New Zealand has committed to expanding its investment in Indonesia in the sectors of agriculture, dairy and geothermal energy. * Singapore - Singapore seeks to have better trade relations by reactivating the so-called six working groups that comprises cooperation in the development of Bintan, Batam and Karimun (BBK) islands. * Australia - Australia will bring a delegation of 50 businesspeople to Indonesia in March 2015 to help increase investment and trade. * Russia - Russia and Indonesia will form a team to accelerate investment in railways, green energy, agriculture and oil and gas in Indonesia. - Indonesia has demanded that Russia adjust its international standard to allow an increase of Indonesian crude palm oil into the country. Indonesia also requested Russia to allow wider access for Indonesia’s agricultural and horticultural products.