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Govt walks tightrope between protectionism, openness
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Adding value: A nickel smelter operated by Virtue Dragon Nickel Industry (VDNI) in Morosi, Southeast Sulawesi, is seen from the air on Feb. 10, 2023. (AFP/Adek Berry)
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conomists have warned the government against pursuing a policy of protectionism even while many other countries have placed curbs on trade.
Instead, they urge Southeast Asia’s biggest economy to prioritize policy reforms for long-term, sustainable growth with the aim of realizing the Golden Indonesia 2045 vision.
However, concerns linger about Indonesia's openness to trade and the government’s determination to resist protectionist pressure.
International trade and the multilateral system, the World Bank has noted, is facing increasing scrutiny, and its future hinges on policy choices.
Recent geopolitical upheaval, including the Russia-Ukraine war and the Israel-Hamas conflict, have fueled protectionist sentiment among policymakers in some of the world’s major economies, prompting to pause or even roll back efforts of international integration.
World Bank lead economist for Indonesia and Timor-Leste Habib Rab opined that Jakarta was moving “on the right track” but needed to continue improving its policy framework to attract foreign direct investment (FDI) and compete in the global market.
“Indonesia’s openness to trade could benefit the country, especially in the current condition where many countries are looking for new sources of supply and new investment destinations,” Habib said during a panel discussion at the 12th Annual International Forum on Economic Development and Public Policy (AIFED) in Bali on Dec. 6.
