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Gov't needs to develop industry for free market era: Trade minister
With market liberalization an all but inevitable consequence of today's interconnected world, the government has little choice but to embrace it and look after the domestic market intelligently, while at the same time developing industry at home, according to Indonesiaâs trade minister
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ith market liberalization an all but inevitable consequence of today's interconnected world, the government has little choice but to embrace it and look after the domestic market intelligently, while at the same time developing industry at home, according to Indonesia's trade minister.
Trade Minister Muhammad Lutfi said market liberalization had now become a global trend and Indonesia needed to open up its markets accordingly.
"The important thing is that we have to 'look after' our domestic market -- not protect it. At the same time, the government needs to prepare a framework, an action plan and swift, intelligent execution," Lutfi said after the second RCEP Participating Countries' Ministerial Meeting at the Myanmar International Convention Center on Wednesday.
The Regional Comprehensive Economic Partnership (RCEP) is a free trade agreement proposal that brings together the 10 member states of ASEAN and the group's six participating partners: Australia, China, India, Japan, South Korea and New Zealand.
Negotiations regarding the partnership were first launched during the ASEAN Summit in Cambodia in November 2012. However, various issues remain that require further discussion between parties. Economic ministers continued those negotiations this week at the ASEAN Economic Ministers (AEM) Meeting in Naypyidaw, Myanmar.
"We are still working on the trade-in-goods issues. We agreed to discuss trade in services in December and will later discuss investment and other related matters," Lutfi said.
Due to the complexity of the issues and the fact that India did not send its economic minister to the meeting this week, the participating ministers agreed to set their target level of liberalization at the "medium" scale.
Citing examples from the series of negotiations, Lutfi said there were some countries that fully supported market liberalization and there were others who opposed it.
According to him, countries that supported global interconnection normally had a larger potential to experience robust economic growth.
However, market liberalization should be equipped with particular measures to ensure the growth of domestic industry, he said.
"As a country, we cannot just protect our market without doing anything," Lufti said. He is also a former head of the Investment Coordinating Board and Indonesian ambassador to Japan.
The minister said the government, in particular the incoming administration of President Joko Widodo, would need to take swift action by developing infrastructure to support the country's industrial development.
One outstanding issue that has hampered the development of domestic industry is energy concerns, especially the limited supply of electrical power. "How can we develop industry if there are frequent power outages?" he said.
According to the minister's calculation, the country would need to develop power plants to generate, at minimum, a combined capacity of 100,000 megawatt (MW).
"If the construction of the power plants costs US$2 million for every 1 MW, the government will need a total of $2 trillion. That means we need other countries [for loans]," he added.
