Over the past few years, Jokowi has been forthcoming with his brand of economic nationalism, which permeates much of his domestic agenda and foreign policy.

But the President appeared to strike the wrong chord on Thursday, prompting observers to warn him about tailoring his messages so as to avoid alienating investors.

 

Speaking at a national coordination meeting of the Trade Ministry, Jokowi laid out a national strategy for recovery from the COVID-19 pandemic, in which he urged industries to prioritize the use of local components over imports.

 

He also said that branding was an important aspect in the success of Indonesian-made products, urging the nation’s 270 million-strong population to become “loyal customers” while calling on state agencies to amplify calls to buy more locally.

“Calls to love our own products must continue to be echoed [...] Also, echo hate for foreign products,” Jokowi said during his speech, which was later met with mixed reactions online and offline.

Trade Minister M. Lutfi defended the President’s comments, saying they were made in reference to a report on predatory pricing on e-commerce platforms, where foreign companies and products unfairly compete against local brands manufactured largely by MSMEs.

Lutfi cited a report on the domestic Islamic fashion industry, which grew rapidly between 2016 and 2018 and employs thousands of Indonesians.

He claimed that foreign digital companies had taken notice of this growth trend and employed artificial intelligence to gather data on the most popular designs in Indonesia.

This market intelligence would then be sold to businesses in China, which would reproduce the most popular designs and flood the Indonesian market with cheaper versions at the expense of local manufacturers and small businesses.

“These small businesses employ around 3,400 people, who cost more than US$650,000 [to employ]. Meanwhile, duties on imports are only $44,000. It is becoming a trend, and when we look for products on digital platforms, they sell a hijab for as low as Rp 1,900 [13 US cents] per piece – this is predatory pricing,” Lutfi said after Thursday’s meeting.

In Indonesia, MSMEs account for some 60 percent of gross domestic product (GDP) and employ 90 percent of the workforce. Throughout the pandemic, the digital transformation of merchants and brands has helped absorb the shocks to the national economy, allowing household spending to remain the biggest contributor to GDP.

According to 2020 data from Statistics Indonesia (BPS), the country booked $163.31 billion worth of exports and $141.57 billion in imports, resulting in a record-high $21.74 billion trade surplus. However, economists expect imports to rise this year as the country recovers.

Meanwhile, Thursday’s comments were warmly welcomed among the intended audience, which includes small business owners and merchants.

M. Ainun Najib, an organizer on the central board of the Indonesian Market Sellers Association (IKAPPI), said that Jokowi’s statement was positive affirmation at a time when COVID-19 was “grinding away at all economic sectors”.

“This is something we have been waiting for after 10 years of drumming up support for the ‘Buy at traditional markets’ movement,” Ainun said in a statement on Thursday.

However, economic and political experts tended to disagree.

Jokowi’s “hate” comment spoiled the entire speech on his strategic policy to boost trade and economic recovery, said University of Indonesia economist Fithra F. Hastiadi.

He said the President could have worded it better, but pointed out that it was hardly the first time that Jokowi had alienated the international community on economic issues.

At the Asia-Africa Conference in 2015, the former furniture shop-owner criticized global financial institutions such as the World Bank, the International Monetary Fund (IMF) and the Asian Development Bank (ADB).

“This [time it] is worse because it is so explicit and ‘hate’ can be interpreted in many ways,” he told The Jakarta Post on Friday.

Separately, head of the economic department of the Centre for Strategic and International Studies (CSIS), Yose Rizal Damuri, said Jokowi’s comments were unwarranted.

He said there were numerous government agencies that could address the issue without turning it into a political statement. The Business Competition Supervisory Commission (KPPU), for instance, can address predatory pricing, while the Indonesian Anti-Dumping Committee (KADI) could hone in on dumping practices.

Yose said that this single statement could have the effect of undoing the government’s hard work in reforming trade and investment policy through the Job Creation Law.

“There are many more elegant ways to deal with it,” he told the Post on Friday.

Ben Bland, the director of the Southeast Asia program at the Australia-based Lowy Institute, expressed a similar concern, saying that Jokowi was undermining his own government’s headline bid to promote foreign investment and trade through the jobs law and other initiatives.

“Jokowi’s mixed messaging reflects a deeper contradiction in Indonesia between the broad support for economic nationalism and the need for foreign capital," said Bland, who has penned a biography of the President, Man of Contradictions: Joko Widodo and the Struggle to Remake Indonesia.

However, Jokowi chose to double down on his remarks on Friday, when he opened a national meeting of the Indonesian Young Entrepreneurs Association (HIPMI).

The President reiterated his point that it should be local not foreign products that benefit from Indonesia’s large domestic market.

He also expressed disbelief that his remarks were viewed negatively, insisting that he was not encouraging protectionism but merely wishing that Indonesia would not fall victim to unfair trade practices.

“Yesterday I talked about how to love Indonesian products, to be proud of Indonesian products and to say that we should dislike foreign products,” Jokowi said in what appeared to be an off-script deviation.

“Is it wrong to dislike something? I think it’s okay to dislike foreign products. Why is it being made into such a big deal?”