This article will discuss the PPs on imports and exports. After all, export-oriented investors would prefer a more efficient, outward-looking location to invest in, and with fewer trade barriers. Countries with a more open and consistent trade policy tend to grow faster, while ambivalent policies create business uncertainty and inefficiency. However, the government seems to prefer import substitution. The latest appeal for Indonesians to prefer local products added a twist to the issue.

Two PPs closely related to international trade are PP No. 28 about industry and PP No. 29 about trade. The two PPs seem to suggest a more restrictive trade regime. PP No. 28 allows the government to intervene in companies’ decisions to access imported inputs (raw materials and intermediate goods) and to export. It lists thousands of 10-digit harmonized system (HS) products defined as “intermediate inputs” that can be controlled by the government. PP No. 29 explains a more detailed mechanism on export and import approval, criteria for importers or exporters and procedures to get the licenses. Ultimately, the government believes that these PPs can help industries to access intermediate inputs.

The major change in these follow-up regulations is the introduction of Neraca Komoditas (commodity balance). The Neraca Komoditas is conceptualized as an integrated system that contains accurate and detailed information on planned domestic supply and domestic demand of industrial inputs. It is supposed to provide data on the type, quantity and quality of goods, as well as the timing of goods needed to be supplied and demanded.

The commodity balance will be updated every December by the central government to be used for controlling or managing trade in the following year. If the Neraca Komoditas says there is a gap in the domestic supply of a good, then the government can impose an export ban on that good.

Additionally, the government can also loosen import restrictions (even adding incentives) to close the gap. If the Neraca Komoditas says there is a surplus, the government can open up exports just enough to close the surplus gap.

The main feature of the Neraca Komoditas system is data. The commodity system is supposed to have complete, integrated data on production, demand, exports and imports from many related ministries. This is an important necessity since the supply and demand of inputs are controlled by different ministries. Unfortunately, the Indonesian government database on goods tends not to be accurate, contaminated by proxies and prone to be politicized.

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