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OECD hits out at govt food policy

The Organisation for Economic Cooperation and Development (OECD) has strongly criticized President Joko “Jokowi” Widodo’s food-sovereignty policies, which it claims are too protectionist and too costly for the economy

Satria Sambijantoro (The Jakarta Post)
Jakarta
Thu, March 26, 2015

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OECD hits out at govt  food policy

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he Organisation for Economic Cooperation and Development (OECD) has strongly criticized President Joko '€œJokowi'€ Widodo'€™s food-sovereignty policies, which it claims are too protectionist and too costly for the economy .

According to the OECD, Indonesia'€™s self-sufficiency policies, through which the President aims to make the country less reliant on imports of food commodities, may be '€œcostly'€ for the economy and some regulations on imports may be '€œill-advised'€.

'€œAgriculture has long been the sector in which self-sufficiency and protectionist measures have been most evident,'€ the OECD stated in its Economic Surveys on Indonesia report released on Wednesday during the opening of its regional office in Jakarta.

'€œThese policies often conflate and confuse different objectives, including protecting farmers'€™ incomes, managing food-price volatility and achieving national food self-sufficiency by minimizing reliance on foreign imports,'€ the organization said.

Jokowi aims to make the country less reliant on imports and has pledged to boost the domestic production of food commodities from rice, corn, soybean, sugar and beef to fish.

The President has stated that the country should have no more rice imports by 2017, even publicly declaring that he will fire Agriculture Minister Amran Sulaiman if the goal is not met.

While praising Jokowi'€™s boldness to overhaul fuel subsidies, OECD secretary-general Angel Gurria noted that regional integration and openness to free trade would be '€œabsolutely critical'€ to boost growth and improve prosperity in Indonesia and the wider Asian region.

In its report on Indonesia, the OECD said: '€œThe pace of reform has slowed in recent years and some protectionist measures have been adopted.'€

According to the OECD Services Trade Restrictiveness Index, Indonesia has scored below the average of its peer countries, including Brazil, Chile, China, India, Mexico, Russia, South Africa and Turkey, in 16 of the 18 service sectors included in the index.

On the subject of the investment climate, the organization also claimed that Indonesia had the fourth-most restrictive foreign direct investment (FDI) regime among 58 countries, according to the OECD FDI regulatory restrictiveness index.

The policy recommendations proposed by the OECD, a Paris-based group consisting of 34 developed economies, have not always been met warmly by Indonesian politicians and policymakers.

United Development Party (PPP) politician Romahurmuziy publicly criticized the OECD in his speech during the House of Representatives'€™ plenary session in 2012, when lawmakers passed a revision to the 1996 Food Law.

'€œThe OECD'€™s view is incorrect,'€ said Romahurmuziy, then the chairman of House Commission IV overseeing agriculture and food.

'€œThe formulation of this [Food Law] shows we are still committed to food sovereignty, independence and resilience. We are an independent country that can determine our own policies without intervention from other countries or organizations.'€

The OECD office in Indonesia will act as the organization'€™s regional office in Southeast Asia and will be the biggest office outside of its headquarters in Paris, according to a press statement.

The Indonesian office will be the organization'€™s fifth regional office. It already has a presence in Germany, Japan, Mexico and the US.

The OECD said that it wanted to foster a stronger relationship with Indonesia and had identified the country as its key partner in the region.

It forecast Indonesia'€™s economic growth would hit 5.3 percent this year and 5.9 percent next year.

Meanwhile, the organization predicted the country'€™s current-account deficit would stand at 2.8 percent of its gross domestic product this year and 2.5 percent next year.

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