The Jakarta Post
President Joko “Jokowi” Widodo has laid out strategies that could bring about a competitive edge for Indonesia when the country faces pressures from other countries over its trade policies, from palm oil to nickel.
The President said on Thursday that by reducing imports and boosting exports, the current account deficit could be narrowed and create a stronger comparative advantage for the country.
“Why am I here? Because there was a maiden export of Isuzu Straga vehicles this morning to the Philippines," Jokowi told reporters during his visit to automotive manufacturer Isuzu Astra Motor Indonesia (IAMI) in Karawang, West Java.
“It’s only going to be one country [export destination] now but within the next three years it’s going to be 20 countries, be it in Africa, East Asia, Middle East. This is what’s expected by the government, by the country. Our exports increasing, continuing to increase, which in turn we hope will reduce our current account deficit and put our trade balance in a surplus.”
Jokowi said he told diversified conglomerate Astra International president director Prijono Sugiarto that Indonesia’s automotive exports needed to be increased to at least 1 million vehicles by 2024, from less than 300,000 vehicles currently.
“That way the current account deficit can be controlled, the trade balance can be managed and we can be ready to fight with any country,” Jokowi stressed. “We can't be pressured by external [parties]. With regard to palm oil [we are] pressured by the European Union, other countries pressure us about nickel [...] No more!”
The EU has begun to impose higher tariffs, from 8 to 18 percent, on Indonesian biofuel, which will remain in place for five years. The new duties followed the European Commission’s findings that Indonesian producers sold biodiesel at unfairly low prices due to government grants, tax exemptions and access to raw materials below market prices.
Meanwhile, the EU also filed a complaint with the World Trade Organization (WTO) on Nov. 22 to challenge Indonesia’s nickel ore export ban as it deemed the policy “goes against WTO rules”. The ban was moved forward by the Indonesian government to be effective starting Jan. 1, 2020, from the previous deadline of 2022.
“If there’s [any party] that challenges [the policy], that’s OK,” said Jokowi. “For our national interest, we will face the concerns raised by other countries”
He also cited the opportunity to create more jobs as another reason to stick to the plan to develop downstream industries for the country’s natural resources sector.
The government has rolled out several policies to court more investment, particularly for the production of goods that substitute its import needs or goods that are oriented for exports, including last year’s revamp of tax holiday incentives directed toward “pioneering industries”, such as petrochemical, electronics and pharmaceutical manufacturing, among others.
In addition, the government is also drafting an omnibus law on job creation that aims to simplify regulations to make it easier for investors to invest in the country, effectively amending articles in more than 70 laws. (mrc)