The House of Representatives’ foreign affairs commission has called on the Foreign Ministry to step up efforts to boost economic diplomacy, pointing to the United States-China trade war and measures taken against Indonesian palm oil as major issues that have slowed economic growth.

Officials from the two institutions met for the first time on Tuesday, with House Commission I member Ilham Pangestu from the Golkar Party raising his concerns over the ongoing trade war and its potential impacts on Indonesia.

“This would, of course, greatly affect the Indonesian economy in terms of trade and investment, so what are the threats and opportunities Indonesia will face in this regard and what economic diplomacy strategy will be carried out by the Foreign Ministry?” he asked ministry officials.

Economic diplomacy remained the ministry’s number one priority, Foreign Minister Retno LP Marsudi told lawmakers as she revealed the direction of Indonesia’s foreign policy for the next five years. The priority programs, announced under Retno’s signature “4+1 formula”, comprise policies she previously laid out during her annual foreign policy address at the beginning of the year, with the only addition being structural reforms.

Deputy Foreign Minister Mahendra Siregar, who was tasked by President Joko “Jokowi” Widodo to deal with economic policies, said the US-China trade war had indeed affected the growth and economic stability of the entire world, including countries in Southeast Asia, and even shaped geopolitical ties between countries.

The latest trade data suggests that economic activity in Indonesia is slowing, in part as a result of the trade war.

However, Mahendra pointed out that the country could still benefit from the situation.

“China and the US are currently experiencing economic tensions, but it provides the possibility for more Indonesian export products to enter the US in the context of a mutually beneficial relationship,” he said.

“We are no longer talking about potential products to export, but products that have actually been exported to the US that can be significantly increased, such as textiles, footwear, rubber, home appliances and furniture.”

Indonesian furniture exports to the US, he revealed, were worth some US$800 million, while Chinese furniture exports to the US reached $33 billion, which means there was a lot of room for Indonesia to explore.

Democratic Party lawmaker Syarifudin Hasan said the Foreign Ministry should step up its role in promoting Indonesia’s commodities.

In the case of palm oil, he questioned why Indonesian palm oil had to be charged with a higher import duty by India compared to that of Malaysia.

As the world’s biggest edible oil importer, India currently imposes a 40 percent import tax on crude palm oil and 50 percent on refined palm oils.

Since January, Indonesia has lost some of its market share in India following the implementation of the Malaysia-India Comprehensive Economic Cooperation Agreement, which reduced the import duty for refined palm oil from Malaysia to 45 percent. In September, however, India imposed an additional 5 percent duty on refined palm oil from Malaysia for six months to curb imports and boost local refining, bringing it to the same level as Indonesia, which is at 50 percent.

“This is clearly detrimental to Indonesia. Why are the tariffs for Malaysian palm oil products cheaper than Indonesian products? I am sure there are still many other products that experienced this problem,” Syarifudin said.

House Commission I member Taufik Abdullah from the National Awakening Party (PKB) raised a similar concern over the tariffs.

”We begin to wonder whether this is because of our free and active foreign policy, which might be the reason we do not have alignments and friends, while Malaysia and India are both Commonwealth countries,” he said.

Indonesia, however, wants India to lower the imposed duty as the latter is the former’s largest palm oil importer, Antara news agency reported. (ipa)

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