Example for APEC members

Example for APEC members

Two significant approvals by the House of Representatives
(DPR) last week deserve more praise than they were given.

One was the decision to amend the 10-year-old taxation system.
The amendments will basically expand the functions of this
country's taxation system beyond its previous revenue providing
and income redistributing functions, to include resource
reallocation.

The other was its approval to ratify the establishment of the
World Trade Organization (WTO) which will administer the new
General Agreement on Tariffs and Trade (GATT), hopefully by
January next year. This ratification basically will thrust
Indonesia further into the global, open and competitive market
economy.

The two approvals complement each other.

The new taxation system will provide an additional tool to
engineer the country's economy in coping with the ever-growing
domestic, socio-economic requirements, as well as adapting to the
fast-changing external economic conjunctures.

The WTO ratification will allow more Indonesian exports to
enter the markets of industrialized countries, while at the same
time it will require more opening of the country's market economy
to global competition, which will consequently make it more
competitive in the global arena.

Both are basic prerequisites for Indonesia if it hopes to
achieve its not-too-ambitious development goals as set out by
President Soeharto for the next 25 years. Quadrupling today's per
capita income to around US$2,660 by the year 2019, or eradicating
poverty completely within the next decade, are no simple tasks.
But they are not impossible to achieve, if this country could
benefit from the huge resources and market potential provided by
a more open global economy.

The new GATT was signed by some 125 countries in Marrakesh,
Morocco, in April after more than seven years of tough
negotiations - known as the Uruguay Round - on freer trade of
goods and services. It will replace the "old" GATT, set up in
1948 as a temporary body pending the creation of an International
Trade Organization (ITO).

Some estimates project the total global value of the trade
liberalizations at an annual US$755 billion in additional trade
by the year 2002 as a result of the new GATT. That goal however,
will not materialize if the signing of the new GATT is not
followed up by the required ratification by member countries'
legislatures. According to the latest data available, so far only
26 member countries have ratified the agreement. Many others are
still deliberating on the ratification, wrongly concerned about
the possibility of WTO becoming a super-government empowered to
make decisions that are legally binding on member countries even
if made against their will. Not a few seem to be stalling in the
hope of squeezing more from their trading partners while
simultaneously letting off less from themselves.

And even more discouraging, most major trading powers like the
United States, Europe and Japan have not ratified the agreement.
It is ironic since the U.S. has been such a driving force since
World War II for free trade. And it reminds one of the fate of
ITO which was sunk by U.S. congressional opposition.

It won't be easy either for Indonesia to accommodate the full
implications of the new GATT. Several points of the Marrakesh
Declaration, as pointed out by Minister of Trade Satrio B.
Joedono after the signing of the agreement, do not meet
Indonesian expectations. Indonesia however, cannot afford to miss
the vast opportunities offered by the agreement, which among
others opens the door for the country to become the fifth largest
economy in the world by the year 2020 in terms of gross domestic
product at purchasing-power parity as estimated by the World
Bank.

It is more than justified for Indonesia to thrust this
ratification as a good example for other members of the Asia
Pacific Economic Cooperation (APEC) forum, which will hold its
second leadership meeting in Bogor, West Java, next month.