The “I love Indonesia” campaign President Susilo Bambang Yudhoyono plans to launch on Wednesday encouraging consumers to buy domestic products should be welcomed as another concerted effort to boost domestic market demand and prevent massive worker layoffs amid exports contracting by an estimated 30 percent so far this year.

The US$6.1 billion fiscal stimulus package the government has allocated through tax breaks to strengthen consumers’ purchasing power and infrastructure development will not be effective in protecting Indonesian jobs if the bulk of the spending goes toward imported products.

True, it is extremely difficult nowadays to distinguish between Indonesian goods and foreign ones, as we live in an increasingly globalized economy with far reaching supply chains. But domestic products in this context refer to goods manufactured within the country using domestic labor, which may or may not use imported raw materials.

The fact that our economy was still able to expand by an estimated 4.6 percent in the first quarter – compared to the deep contraction most of our neighboring countries such as Malaysia, Singapore and Thailand experienced – should be attributed to domestic robust consumption.

The role of consumers in helping our nation spend its way out of the current steep downturn cannot be overemphasized, as the economy desperately needs additional spending right now.

A concerted campaign encouraging consumers to buy local products is also more sensible and sustainable than succumbing to protectionist temptations as many other countries have done in attempting to cushion their respective economies from the global downturn.

China, with a potential market of 1.3 billion people, has even gone as far as promoting what it calls patriotic consumption. The rationale behind China’s move is the symbiosis between production and consumption: there is no consumption without production, just as there is no production without consumption.

If demand is insufficient, the economy will remain weak, products will not sell and business conditions will inevitably deteriorate, leading to potential worker layoffs.

In this current difficult environment, it is crucial for us to understand that by buying local products, we are actually investing in the country’s future and consequently in our own future.

As the rate of unemployment has increased in recent months due to the sharp contraction in demand from the international market, consumption is falling, retail sales are shrinking and tax revenues are also declining sharply, most economic policies nowadays focus on saving and creating jobs.

But the buy-Indonesian campaign will not be sufficient to safeguard the domestic market given the huge excess manufacturing capacity that now exists in most countries, notably China. Moreover,  our vast coastal areas are vulnerable to smuggling.  

The domestic-product promotion campaign will supplement other measures already taken to prevent imported goods from being smuggled into Indonesia, such as a Trade Ministry regulation channeling imports of foods, beverages, electronic goods, textiles, garments and footwear to five designated seaports – where customs services are relatively more efficient and technically more competent.

The effectiveness of the “I love Indonesia” campaign will depend on the government’s ability to protect consumers from inferior or fraudulent goods and protect the domestic market from cheap goods dumped by foreign producers.

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