Goverment wants DPR to stop rift on protectionism
JAKARTA (JP): The government, which has been widely criticized for its protectionist measures for certain industries, assured yesterday that any future decision on protection will be priorly deliberated by an inter-ministerial team.
State Minister for Investment Sanyoto Sastrowardoyo said in a hearing with Commission VI of the House of Representatives (DPR) yesterday that the team, led by the Minister of Finance, will discuss the eligibility of protection for certain industries based on proposals from infant producers.
The minister was criticized soon after he stated that the olefin project of PT Chandra Asri, a company controlled by the Bimantara and Barito Pacific groups, will be protected by the government through the imposition of high tariffs on imports of olefin products. A number of other cabinet ministers, who were asked by journalists and businessmen, tried to explain the government's stance on protectionism.
President Soeharto said last week that the imposition of protection will be limited for certain industrial plants within a limited period of time.
Sanyoto, who is also chairman of the Investment Coordinating Board (BKPM), said yesterday that the government thus far has not received any proposal from Chandra Asri for the protection of its products.
"But, please, do not prolong discussions on protection because such a measure will be arranged by the inter-ministerial team," he said.
"The government is willing to give protection but the company itself has not even sent any proposal asking for protection. So, why should we make it a controversy?" Sanyoto told reporters during a break.
Necessity
Sanyoto argued that protection for infant, upstream and strategic industries is necessary, especially in developing countries like Indonesia, to protect them from fierce competition with established companies from developed countries.
"From a macro-economic aspect, protectionism is to help local products compete with imported products ... which are marketed here at very competitive prices," Sanyoto contended.
He noted that the long-term goal of protectionism is to rid Indonesia of dependence on imported products whose raw materials are available domestically.
In giving protection, Sanyoto said the government will consider the principles of the General Agreement on Tariffs and Trade (GATT), of which Indonesia is one of the signatories.
"Article 10 of the GATT allows developing countries to protect their infant industries," Sanyoto told members of the commission, which deals with manufacturing, mining and energy industries.
The minister noted that besides infant and upstream industries, the government also protects industrial activities of small enterprises and cooperatives.
According to a 1993 presidential decree, the government protects 37 businesses of small enterprises and cooperatives, six lines of businesses and eight lines of retail businesses which are especially given for local entrepreneurs, as well as 20 services.
Among the protected businesses are the industries of salt, home-produced sugar, hand-made batik, farming tools, poultry, carpentry tools, taxi services, small ships, television sets, boarding houses, massage and beauty salons, car rentals, container services and goods inspection. (rid)