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oncurrently with its economic growth, Indonesia has intensified its involvement in various international forums. In terms of international trade, it has shown its dynamism and worked closely with other partners through wide-ranging platforms to support the multilateral trading system envisioned by the World Trade Organization (WTO). The Jakarta Post's Linda Yulisman talked to Trade Ministry director general for international trade cooperation Iman Pambagyo on foreign trade policies and other issues.

Question: Compared to some other developing countries, such as China and India, Indonesia seems to be more aggressive in sealing free trade agreements (FTAs), either bilaterally or regionally. Could you elaborate why Indonesia does this?

Answer: We see myriad opportunities offered by these agreements. This is the game today and if we don't take part in it, we will, in turn, lose the market. I oppose the view that says China is not aggressive. China has already
signed bilateral trade agreements with Australia and New Zealand, and is negotiating similar pacts with South Korea, Japan and
some others.

So, actually other countries also follow this trend. However, in China's case, the country has a very strong industry so that it can penetrate a wider market, even without a comprehensive economic partnership agreement or FTA.

Indonesia's average import tariff is also lower than other developing nations, such as Brazil (13.7 percent), India (13 percent) and China (9.6 percent). There has been concern over this because a higher import tariff can, in fact, be an incentive to investment and foster domestic industry. How would you respond to this issue?

Perhaps, our current low average import tariffs can be attributed to our policy of gradually reducing tariffs on a unilateral basis since the 1980's. This policy eventually caused asynchrony in our tariff structure with downstream products enjoying lesser duty. This policy did not provide an incentive for local production and, instead, promoted imports.

We've been trying to fix this by updating a harmonized system code in 2012, such as by increasing certain tariffs under the most favored nation scheme when necessary. Lower tariffs go to imported capital goods, raw materials and intermediate goods. However, they are still not 'high enough' because the base tariffs were already low.

Actually, we still have space to raise the tariffs to around 30 percent under the WTO. But we haven't done this because some stakeholders [related ministries, industrial players] have decided against it.

We should view this through a holistic approach as the decision affects end consumers and industries that might need the imported items for their production input.

To some extent, high import duty can be a factor that pulls investment, but it's not the only measure to help domestic industry. Apart from the tariff, investors consider other factors when they choose which countries to put their money in. Japanese automaker Toyota, for instance, is willing to invest in Indonesia because of its huge automobile market, instead of the import tariffs, and that's normal because it first seeks a captive market to sell its products.

How do you assess the result of the newly-launched negotiation of the regional free trade talks between ASEAN and its six main trading partners?

The ongoing process in the talks of the regional comprehensive economic partnership is very positive. All parties involved in it have shown their enthusiasm to proceed even though we have challenges due to the fact that there is no precedence for such an effort to consolidate several FTAs in any part of the world.

Many parties have considered this move the biggest exercise outside the WTO because it involves a huge market of 3.4 billion people. Despite the challenges, participants are making attempts to reduce divergence on coverage of the agreement.

I get a sense that all parties, including China and South Korea, are very serious about the scoping paper. The scoping paper has been finalized and we are still waiting for approval from Korea, China and India.

Prior to the first round talks, there have been some requests to include additional issues, from Japan [intellectual property rights, competition policy, e-commerce] and New Zealand [government procurement]. We've decided to prioritize the existing items [trade in goods, trade in services and investment] for discussion and then see how the newly set up working groups operate.

When the talks enter the second or third rounds, we can possibly move on with further discussion in other areas, but this should be initiated through the deliberation of the trade negotiating committee.

Indonesia still maintains its stance not to join the United States led Trans-Pacific Partnership (TPP) and there is a view that this shows it does not want to get out of its 'business as usual' mode by embracing higher standards and changing its domestic policy to enhance efficiency, and just stick to conventional pacts under the RCEP. What is your response to such an opinion?

Since the 2000's, we've adopted a belief that we constantly require external pressure to carry out domestic reforms. However, of course, we cannot solely depend on that.

Our participation in APEC gives us peer pressure, but it's not binding. We see our involvement in ASEAN also as an external pressure to improve, as seen in the case of the national single window, which upon implementation can cut our export and import costs. So, the external pressure is relevant.

Regarding the TPP, we need to clearly examine our preparedness to execute our commitments. Are we ready if the discipline is materialized to consult each member whenever we want to adopt a policy? I don't say it's wrong, but I'm skeptical about our readiness to make such a commitment.