Indonesia : More aggressive in fighting for fair trade Vincent Lingga  ;   A staff writer at The Jakarta Post

JAKARTA POST,  03 Desember 2014

                                                                                                                       

Strikingly different from the seemingly high nationalistic tone of his election campaign rhetoric a few months ago, President Joko “Jokowi” Widodo has immediately embarked on a high-power drive to woo more foreign investment to reinvigorate Indonesia’s economy. He fully tapped the recent Asia-Pacific Economic Cooperation (APEC) and G20 leaders and CEO summits in Beijing and Brisbane to convey his welcome message to investors, promising them a much easier way of doing business in the largest Southeast Asian economy and enlightening them on the great opportunities available in the development of infrastructure and natural resources. Jokowi’s predecessor Susilo Bambang Yudhoyono went on a similar drive early on during his first term, organizing an infrastructure summit in early 2005. But nothing much happened even after three such international investment summits. It was business as usual in the bureaucratic and regulatory framework, as the national leadership did not show any sense of urgency at all. But Jokowi tried to give more teeth to his campaign. Two weeks before his first debut on the international stage, he had staged a similar campaign within the country, enlightening officials, the people and regional government leaders on the importance of private investment. He rightly selected the Investment Coordinating Board as the first office to experience the well-known Jokowi-brand blusukan or impromptu inspection of how the bureaucratic licensing machinery worked and how public services were delivered. This reiterated his overriding concern with making things easier for business people and investors, knowing that it is private investment that creates jobs, providing wages for generating purchasing power to propel the wheels of the economy. Good also to learn that his plenary Cabinet meetings and limited Cabinet sessions headed by the coordinating ministers also run like a nerve or operation center where bureaucratic actions are considered much more important and urgent than bureaucratic procedures. We are still far from the point of an economic crisis. But the high sense of urgency Jokowi has been showing from the outset has nurtured a kind of mindset that treats his Cabinet as the emergency center of a hospital where fast decisions and concrete programs of action are much more important than bureaucratic procedures or rigidities. During the commodity boom from 2010 to early 2013, Indonesia was notorious internationally for the series of protectionist measures the complacent government took. But Jokowi himself has been campaigning for a more fair trade, cautioning its major trading partners that Indonesia does not want to serve primarily as the market for foreign manufacturers. He openly told the leaders of Indonesia’s major trading partners to remove barriers to Indonesian products such as palm oil. At a recent meeting in Jakarta with the European Council president, Herman van Rompuy, Jokowi personally asked the EU’s principal representative to ease the barriers to palm oil products in the union, as this sector supports millions of smallholders and workers. Indonesia’s palm oil industry is the largest in the world with an annual capacity of more than 31 million tons. Lately though, the government seems to have raised the ante. Apparently buoyed by its recent success in its fight against the United States tobacco control law that discriminates against the sale of clove-blended cigarettes from Indonesia, the Industry Ministry has embarked on a campaign against Australia’s plain cigarette packaging regulation. Indonesia, the world’s top producer of clove cigarettes, first brought its complaint against the US in 2010, arguing that the ban hampered trade between the two nations. The WTO ruled in September 2011 that the US ban was discriminatory. But last June, the two countries asked the WTO to suspend arbitration proceedings as they worked toward a deal after they signed an agreement whereby the US would not unjustifiably discriminate against certain tobacco products from Indonesia that aren’t currently banned but could fall under a new US rule leading to further regulations. Director General for Agro-industries at the Industry Ministry Panggah Susanto has started the campaign in print media and online news services, attacking the Australian regulation as violating international agreements on protected trademarks and international property. “We should retaliate by requiring Australian wines and beers sold in Indonesia to use plain packaging as well, because the regulation seems designed to specifically hinder Indonesian cigarette sales in Australia,” Susanto asserted. Earlier, Indonesian Trade Minister Rachmat Gobel, at a meeting with Australia’s Trade and Investment Minister Andrew Robb on the sideline of the APEC Summit in Beijing, asked Australia to review its plain cigarette packaging regulation because of its adverse impact on Indonesia’s cigarette industry, which is a very labor intensive sector, contributing more than US$12 billion in excise tax revenues to the state budget. Indonesia has also joined several other countries in filing an international arbitration lawsuit at the WTO in Geneva against the Australian regulation. On a cautious note, though, both countries should act quickly to settle the dispute, and not allow it to damage the tens of billions dollars worth of their two-way trade. Indonesian clove cigarette sales to Australia are still quite a negligible portion of its global exports. Likewise, Australian alcohol drinks will never enjoy brisk sales in Indonesia, the country with the world’s largest Muslim population. A protracted dispute over such a small part of their expanding two-way trade landscape could create more problems to the long-term relationship of the two neighboring countries. ●