GATT urges Indonesia to maintain reform

GATT urges Indonesia to maintain reform

GENEVA (Reuter): The GATT world trade body yesterday urged Indonesia to maintain the pace of economic reform to improve efficiency and overcome its anti-export bias.

In a review of Indonesia's trade policies since 1991, it also warned the proliferation of export controls -- especially on natural-resource-based products such as wood products -- runs counter to Jakarta's import liberalization efforts.

Trade delegates from the 124 member countries of the General Agreement on Tariffs and Trade (GATT) were discussing the report at a two-day meeting ended yesterday.

"The most recent trade reforms in May and June 1994 are an encouraging sign of the government's recognition of the problems, but the measures themselves are quite modest," said the report by GATT staff economists.

"More yet is needed to overcome the anti-export bias of the trade regime and stimulate domestic competition," it added.

Export controls -- including bans, quotas, taxes, licensing and compulsory quality standards -- currently affect more than half of Indonesia's non-oil exports, according to GATT.

Some 85 percent of wood products and 60 percent of agricultural commodities are covered by such bans or limits.

The government has justified the measures on grounds of promoting environmental conservation, expanding value-added production and ensuring adequate domestic supplies.

But GATT said: "The proliferation of export controls, especially on natural-resource-based products, runs counter to Indonesia's import liberalization efforts and risks undermining advantages extended to efficient exporters from trade reforms."

"Indonesia's plywood-processing is technically inefficient by world standards, wasting timber and appearing to contribute little to forest conservation," it added.

Trade reforms since 1990 have focussed primarily on lowering tariffs and surcharges, reducing import licensing restrictions and deregulating the investment regime.

Indonesia ranked 17th in merchandise imports worldwide and 18th in exports of goods last year, according to the Geneva-based GATT.