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US envoy criticizes sluggish RI trade
The US ambassador to Indonesia says Indonesiaâs trade percentage of gross domestic product (GDP) has not changed much since 1980 and will likely continue to stagnant unless the country withdraws barriers to imported goods and services
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he US ambassador to Indonesia says Indonesia's trade percentage of gross domestic product (GDP) has not changed much since 1980 and will likely continue to stagnant unless the country withdraws barriers to imported goods and services.
'There are people who believe that the best way for Indonesia to make the jump from an economy that depends on natural resources and domestic market for its growth to one that is more reliant on manufacturing is to put up barriers to imported goods and services and look for domestic substitutes,' US Ambassador to Indonesia Robert Blake said in a lecture at the Al Azhar University in South Jakarta on Tuesday.
Blake went on to say that the outlook had led the current government to introduce measures, such as demanding locally sold goods contain a specific percentage of local content and protecting Indonesian companies from competition so they can grow.
He criticized the strategy, saying it was an inward looking policy that would lead to higher prices and fewer consumer choices, as well as lower quality goods, while at the same time the protected industries would have less incentive to respond to market demand or invest in research and development.
Blake went on to say that Latin American countries, which had pursued the policy in the 1980s, had seen a loss of productivity and an increase in inequality as a result of the policy.
The percentage of trade in Indonesia's GDP measured 51.29 percent in 2011, according to the World Bank. Total merchandise and service trade was about 50 percent from the 1980s to 2014, except for in 1998 when monetary crisis hit.
Indonesia posted a trade surplus of US$1.13 billion in March, with both imports and exports falling sharply in March.
The slowdown in imports led to a surplus, while exports have also been hit by slowdown in demand for Indonesia's key commodities because of the global economic slowdown affecting export destination countries as well as the weakening of the rupiah. (fsu/ebf)
