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Together with the Indonesian Ministry of Trade the USAID-financed ‘Support for Economic Analysis Development in Indonesia’ (SEADI) project held a conference in late January 2013. Policy makers, Indonesian and international academicians as well as private sectors and civil society representatives discussed about the upcoming regional and multilateral trade policy developments. In his opening speech of the Trade Conference 2013 the Indonesian Minister of Trade, H. E. Gita Wirjawan took up a relaxed stance on the recent trade deficit. As this is primarily driven by imports of investment and intermediate goods it benefits the government’s commitment to enhance manufacturing capacities in Indonesia. As long as FDI inflows are continuing to be strong, a deficit does not put a burden on the back of the government, said Gita. With regards to the advised trade agreements the Minister stressed the need to socialize this properly: trade policies are nothing to write home about, neither in the US nor in Indonesia.
US Ambassador Scott Marciel underlined in his statement the economic ratio behind imports: besides the fact that imports of technology, raw materials and also consumer goods are a pure economic necessity they trigger competition, helping to increase the quality of domestic products and lowering market prices.
The Trade Conference 2013 primarily addressed the ‘Trans Pacific Partnership’ (TPP) and the ‘Regional Comprehensive Economic Partnership’ (RCEP), a possible trade agreement among ASEAN and its main dialogue partners. The golden thread running through all discussions were the expected benefits and challenges of the two major trade frameworks. While for instance Jeff Schott, a fellow at the Peterson Institute for International Economics presented calculations highlighting Indonesia’s gains when signing TPP; the Government of Indonesia had a slightly different perspective on it. The Ministry of Trade’s Director General for International Cooperation, Iman Pambagyo countered that ‘non-economic challenges’ should be considered as well. Furthermore he referred to the genesis of the TPP concept which was put on the agenda by largely trade oriented countries. A country like Indonesia might not be intuitively mirrored by such an agreement among very different economies.
Several speakers stressed that the state of information about both TPP and RCEP is not sufficient, within the Indonesian academia as well as the private sector. CSIS researcher Dr. Titik Anas revealed that the utilization of even existing preferential tariffs by the Indonesian private sector is far below its potentials. The RCEP would be a ‘large step forward’ not at least as it could possibly replace some of the multiple bilateral agreements ASEAN has signed so far.
Sherry Stephenson, a Senior Fellow at the International Centre for Trade and Sustainable Development (ICTSD) in Geneva highlighted in her presentation the stunning gains to be expected from liberalizing trade in services. Her analysis recurred to the great importance of regional and global value chains, requiring smart logistics, financial and other business related services. Consequently, she demanded for a ‘holistic’ trade policies approach.
In a kind of summary Michael Plummer, ENI Chair in International Economics Faculty and Academic Liaison, SAIS Bologna, moderated some of the academic and political positions of the conference. It is ‘better doing it right’ than sticking to too ambitious schedules, said Michael Plummer. He referred to the European integration process that often has been lagging behind schedule – without jeopardizing the project itself. Furthermore, said Plummer, a compensation mechanism for disadvantaged groups is needed.
In his closing speech Vice Minister Bayu Krisnamurthi brought the discussion back to a political level: in the end, said Bayu, all related Indonesian communities have to feel that they are being taken seriously when preparing for any kind of trade-related agreement. Political decision-makers are facing the challenge to meet the expectations not only of domestic industries but also those making their ends meet in the agro sector.
KADIN Indonesia - 2013
Capital: Jakarta
Population: 259 million (2016)
Currency: Indonesian Rupiah
Nominal GDP: $936 billion USD (IMF, 2016)
GDP Per Capita: $3,620 USD at Current Prices (IMF, 2016)
GDP Growth: 5.0% (2016)
External Debt: 36.80% of GDP (BI, Q2 2016)
Ease of Doing Business: 91/190 (WB, 2017)
Corruption Index: 90/176 (TI, 2016)
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