CORE: Industrialisation Remains Vital for Indonesia's Economic Growth Targets
Jakarta (ANTARA) - Executive Director of the Center of Reform on Economics (CORE) Indonesia, Mohammad Faisal, has assessed that industrialisation remains one of the most important endeavours for Indonesia to achieve its 8 per cent economic growth target.
“It is impossible for us to reach higher economic growth without industrialisation, and the industrialisation prioritised by the current government is the acceleration of downstreaming,” said Faisal in Jakarta on Friday.
The final outcome of the Indonesia-United States trade tariff negotiations is set out in the Agreement on Reciprocal Trade (ART) document. In general terms, the US continues to impose a reciprocal tariff of 19 per cent on imported products from Indonesia. Nevertheless, a list of 1,819 tariff lines and textile products identified in the agreement have been granted a zero per cent tariff exemption.
According to Faisal, it is impossible for Indonesia to achieve higher economic growth without industrialisation, and the industrialisation currently prioritised by the government is the acceleration of downstreaming.
Of those 1,819 tariff lines, many are commodities such as palm oil, coffee, cocoa, spices and unprocessed rubber. Faisal said the government needs to exercise caution, as exports of raw commodities could potentially disrupt domestic processing industry activities.
“With downstreaming now being suppressed through policies like this, it is certain that the higher economic growth target of up to 8 per cent will not be achievable,” he said.
He then compared the final US trade tariff outcomes with those of Vietnam. Faisal noted that Vietnam secured zero per cent tariffs for products from high value-added manufacturing industries.
“If we compare with Vietnam, what they endeavoured to obtain zero per cent tariffs for were manufactured products — and not just any manufacturing, but high value-added manufacturing such as electronics,” said Faisal.
Furthermore, Faisal highlighted the local content requirement (TKDN) policy, which the US has described as significantly hindering export activities to Indonesia.
“But what about the impact on security, safety and also on consumers in Indonesia? TKDN was implemented precisely to drive industrialisation, which is a national priority agenda,” said Faisal.
He cautioned the government against granting special exemptions for the US, as this would create the potential for investors from other countries to demand the same treatment.
“If it is abolished specifically for America, this sets a bad precedent — other investors will also demand the same. Because in the international trade and investment system, there must be no differentiation in treatment,” he said.