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RI marginalized in global value chains, in need of trade reforms: World Bank
The World Bank has praised Indonesia over recent legal changes encouraging investment in the country but said Jakarta has not done enough to reform trade policies that are hurting the manufacturing sector.
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Pile it high: Containers are loaded on Dec. 18, 2018, at Tanjung Priok Port in North Jakarta. (Antara/Sigid Kurniawan)
T
he World Bank has praised Indonesia over recent legal changes encouraging investment in the country but said Jakarta has not done enough to reform trade policies that are hurting the manufacturing sector.
World Bank chief economist for the East Asia and Pacific region Aaditya Mattoo said Indonesia needed to implement deeper reforms to facilitate imports and exports.
“Indonesia has been relatively marginalized by global value chains,” Mattoo said on Monday in a press briefing, adding that a downward trajectory in the country’s manufacturing sector could be rectified by reforming trade policies.
Data from Statistics Indonesia (BPS) revealed that the manufacturing sector’s share of the country’s gross domestic product (GDP) has been declining over the years.
In 2010, the sector was responsible for 24.80 percent of Indonesia’s GDP, but that figure shrank to 20.84 percent in 2015, and then dropped further to 18.34 percent in 2022.
Trade reforms are needed to mend the situation, Mattoo said, noting that current policies failed to make it easier "to import in order to export", referring to companies that import parts or materials to create products for export.
Begging to differ, Institute for Development of Economics and Finance (Indef) executive director Tauhid Ahmad said imports were hampering the development of the manufacturing sector.
