The US is looking at increasing trade with Indonesia through the signing of the Comprehensive Partnership Agreement during the visit of President Barack Obama next week, but officials in Washington say that uncertainties over the rule of law in Indonesia may limit the agreement’s growth.
Commerce Secretary Gary Locke said Wednesday that, while two-way trade with Indonesia had grown by 43 percent since 2005 to US$18 billion last year, it was still small in comparison to US trade with Southeast Asian neighbors Singapore, Thailand and Malaysia.
Indonesia, he told a meeting with the Washington-based Center for Strategic and International Studies (CSIS), is only the 28th largest trading partner of the US.
A participant in the meeting pointed out that trade figures with Indonesia pale in comparison to the $360 billion two-way trade with China.
While efforts are being made by the Obama administration to promote his National Export Initiative that links trade with job opportunities at home, Indonesia must do its part to increase trade ties, he said.
“It’s incumbent upon Indonesia to make market-oriented reforms that will make it a more attractive market,” Locke said, according to a transcript of the meeting made available by the CSIS.
“Economic nationalism, regulatory uncertainty, unresolved investment disputes, the lack of transparency give pause to American companies seeking to do business in Indonesia.
“If Indonesia is looking for a partner to address these issues, the US is eager to lend assistance because ensuring that increased trade actually happens requires a long-term partnership.”
When asked for more specifics about the problems in trade with Indonesia, he cited the development of the rule of law, and especially transparency in the decisions of purchasing and contracts by governments, whether they be federal, national or local governments.
“When US companies make an investment there, those companies want to know that the agreements, the ground rules upon which they relied on when they made those investment decisions will, in fact, be long-term, and that there is predictability, and basically, that things operate under a rule of law.”
Locke announced that he planned to visit Indonesia in May, as a follow up to Obama’s visit, on a mission to support American companies selling clean energy technology, a growing sector in Indonesia for which other countries like India and China are also vying.
