NEW TRADE LAW EXPECTED TO BOOST DOMESTIC PRODUCTION IN INDONESIA
Posted on February 06, 2014 on 07:04:34 WIB
The House of Representative is set to ratify a new trade bill next month, which aims to give more power to the government in securing the domestic supply of goods, while trimming its negotiating capacity in international trade agreements. The new law would require the government to provide facilitation to small-medium-enterprises and provide fiscal incentives for producers — foreign or domestic — to make their goods locally in order to boost local supply. “We want to make sure that many products consumed domestically can be produced within the country,” Trade Minister Gita Wirjawan said on Tuesday. “We hope the economy can be supported not only by consumption but also by production activities.” The new trade law is expected to unify many trade rules currently scattered throughout various laws. Different administrations have been pushing for renewed trade laws for decades but they have failed to eventuate. Indonesia still applies an old colonial law dating back to 1934. The substance of the Trade Bill has been approved by the working commission of the House of Representatives Commission VI, which oversees trade affairs. The bill is scheduled to be approved during the plenary session on Feb. 7. Gita said the new trade law will be closely associated with the recently enacted Industrial Law, ensuring a wide option of incentives for investments made within the country. This in turn is expected to guarantee supply of goods for the population. The new bill will afford the government more policy space to intervene using the state budget if the nation faces a scarcity of basic goods or other merchandise. It can also halt any exports of basic commodities and channel them to fulfill local demand, a policy that seeks to prioritize the country’s depleting natural resources that include oil, gas, rattan and timber. Bimo Aryo, a member of House Commission VI, said the new law will dismiss public concerns that Indonesia is in favor of trade liberalization. “We are not pro-market, but that does not necessarily mean Indonesia is anti-market,” he added. The lawmaker said one of the clauses to be included in the bill will give the government authority to limit and stop imports of products in order to protect domestic industries or other conflicts against national interest. He added that the bill will determine clear zoning schemes for traditional markets and modern markets so that the former would gain more opportunities to flourish. Regarding the international trade regime, the law will also require the government to consult the House before signing any international trade agreement. A permanent secretariat will be established to assess and review existing agreements or those yet to be ratified, the lawmaker said.