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.