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Indonesia vows greater liberalization under APEC

Haeril Halim (The Jakarta Post)
Lima, Peru
Tue, November 22, 2016

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Indonesia vows greater liberalization under APEC Vice President Jusuf Kalla and his entourage arrive in Lima, Peru, early on Friday. (Vice President Office/File)

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ndonesia pledged that it would keep its market open for trade and investment and fight against protectionism as part of its commitment to the 2016 Leaders’ Declaration of the Asia-Pacific Economic Cooperation (APEC) signed by 21 APEC leaders in Lima, Peru on Sunday.

The leaders’ declaration reaffirmed the group’s commitment to the Bogor Goals, an APEC commitment made in Indonesia in 1994 to embrace open and free trade and investment by 2020, amid the growing trend of protectionism among APEC members.

The biggest blow to the Bogor commitment was the pledge made by US president-elect Donald Trump to scrap various free-trade deals initiated by his predecessors including the North America Free Trade Agreement (NAFTA) and the Trans-Pacific Partnership (TPP).

The Lima commitment has been made amid warnings from the International Monetary Fund (IMF) that trade growth has been “too low for too long” and is expected to remain below 3 percent in the next couple of years.

Vice President Jusuf Kalla said in spite of the IMF’s projection, Indonesia would continue pushing for economic reform to boost trade with its APEC partners.

To lure investment and trade, President Joko “Jokowi” Widodo has issued a total of 14 economic packages, since taking office in 2014, with more investor-friendly policies in the pipeline.

“All APEC members must be ready to reform their economies as the slow trade is projected not only for this year but also in the following years,” Kalla said after the closing ceremony of the APEC Summit in Lima late Sunday local time.

Kalla said the government would also improve people’s purchasing power in the country to protect domestic interests without disrupting the country’s free trade agenda with APEC members.

“I spoke with [Japanese] Prime Minister Shinzo Abe during the meeting, asking him what efforts Japan would make to improve people’s purchasing power and he said his government would increase the salary of civil servants by up to 2 percent. We can have a 8.5 percent increase in Indonesia,” said Kalla.

During the closing ceremony, Kalla also had an encounter with US President Barrack Obama during which he asked the outgoing leader if Trump would make good on his promise to kill the TPP.

Kalla said Obama calmed him and told him that Indonesia and APEC members should have no reason to worry because it was not possible for Trump to realize all his campaign promises.

Meanwhile Peru’s President Pedro Pablo Kuczynski said on Sunday that it was too early to write off the TPP following Trump’s surprise win in the US presidential election, after campaigning on promises to scrap it.

Kuczynski said economic hardship had fueled support for Trump in the US and the Brexit decision in the UK. “[It’s] more than protectionism, it’s a reflection of difficult economic conditions,” Kuczynski said as quoted by Reuters on Sunday.

Separately on the submit’s sidelines, Kalla also held a meeting with Prime Minister Abe, who reaffirmed Japanese commitment to support economic, industrial and infrastructure development in Indonesia.

“Japan is very open about private sector investment especially in the sector of car manufacturing. We hope that our export capacity can grow faster than Thailand’s,” Kalla said.

On the summit’s final day, 21 APEC leaders including Kalla had an informal meeting with IMF managing director Christine Lagarde.

“The IMF recommends that APEC members conduct economic reform because global trade is predicted to be under 3 percent this year and next year,” Kalla said.

In addition to preventing protectionism, the Lima agreement also secured commitments from 21 APEC leaders to strengthen cooperation in three thematic priorities: regional economic integration and quality growth; enhancing the regional food market; the modernization of micro, small and medium-sized enterprises (MSMEs) in the Asia-Pacific; and developing human capital.

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