Indonesian Trade Ministry Downplays Fears of Economic Nationalism
Indonesia will maintain an open market for foreign investment, despite fears of rising economic nationalism ahead of the 2014 election.
The Trade Ministry meanwhile hopes to use its huge economic potential as leverage to pursue fair and mutually beneficial economic policies within Southeast Asia.
Foreign investors have grown anxious ahead of the 2014 general election, fearing an increase in protectionist policy as a means to gain votes. Over the last 12 months, the Trade Ministry has introduced a string of import taxes on products such as beef, fruits and vegetables, and cellphones.
Charles Goddard, the editorial director at the Asia Pacific Economist Intelligence Unit, raised what he dubbed as the “big question” during the 2013 Indonesia Summit organized by The Economist magazine in Jakarta on Thursday.
“Economic nationalism: is it a serious problem or [just] a part of the electoral process?” Goddard asked.
“The trade policy of Indonesia is specifically designed so that Indonesia can move up the value chain,” Trade Minister Gita Wirjawan said at the forum.
“This is not out of parochial, nationalistic sentiment. This is only for Indonesia to try to become half as good as the [South] Koreans, half as good as the Japanese. ... We want people to make money,” Gita said.
He added that Indonesia moving up the value chain would drive up incomes and domestic consumption, allowing the country’s economy to reach $6 trillion in the next 20 years. “There is a huge economic pie to reap,” he said.
Chatib Basri, chairman of the Investment Coordinating Board (BKPM), said that the increase in economic nationalism in the lead up to next year’s general election would not last.
“Every prospective [president] ... needs political support, which they will get from job creation [through an open market],” Chatib said.
Chatib added that enough jobs would be created if the economy grows by more than 6 percent, however investment would need to reach 32 percent of the gross domestic product each year for this to occur. Chatib said that there is not enough money in Indonesia to reach a level of investment that will trigger this amount of job creation.
“Anyone appointed as president will be open [to foreign investment, otherwise] he or she must be satisfied ... that [not enough jobs] will be created,” he said.
On the other hand, Indonesian businesses are concerned that they have yet to receive the same treatment overseas as foreign investors currently receive in Indonesia.
Pahala Mansury, the chief financial officer at Bank Mandiri, Indonesia’s largest lender by assets, said doubts over Indonesia’s openness to foreign investment should be quashed.
“We’re already a very open market,” Pahala said. “The question is, will Indonesian institutions get the same treatment if they want to expand their businesses to Singapore, Malaysia, Thailand and China?”
Finance Minister Agus Martowardojo said that although Indonesia’s banking sector offers one of the highest margins in the region and is relatively open, attracting many investors, Indonesian banks find it difficult to open branches in other countries.
“Its important to have reciprocity,” Agus said.
Karen Agustiawan, president director of state energy company Pertamina, raised similar concerns about reciprocal business policy in the region, saying Pertamina was left out of investment opportunities in neighboring countries.
Tito Summa Siahaan, Francezka Nangoy & Erwida Maulia - Jakarta Globe | February 28, 2013