Indonesia to offer to liberalize 7 service subsectors at WTO

Indonesia to offer to liberalize 7 service subsectors at WTO

Zakki P. Hakim, The Jakarta Post, Jakarta

Indonesia is preparing to liberalize seven of its service
subsectors in a bid to improve the country's support services in
trade of goods.

According to Minister for Trade, Mari E. Pangestu, the
subsectors are going to be offered for negotiation with the WTO,
and will include legal services, health services, vocational
education, construction, hospitals, business visas and banking.

The "service offers" will be submitted in the coming WTO
meeting next month in Geneva.

"Based on our assessment, these seven subsectors are ready to
be liberalized. However, we are allowed to revise the list until
May," she told reporters after a meeting with state officials
from the ministries of health and national education, central
bank, and directorate general for immigration late last week.

However, details of legal requirements for the proposed
liberalization are still unclear as the related institutions are
still in discussions until next month.

Minister of Health, Siti Fadilah Supari, said Indonesia was
ready to open access only for hospitals specializing in specific
diseases, such as cancer, and they must have a capacity of more
than 400 beds.

"We will limit such hospital operations to Jakarta and
Surabaya only," she said, adding that the government would compel
foreign hospitals to employ a certain percentage of local
workers.

Under the WTO, member countries negotiate commitments to
services liberalization under a framework of principles called
the General Agreement on Tariffs and Services (GATS).

GATS groups services into 12 sectors and recognizes 160
subsectors. The sectors are: business services, communications,
construction, distribution, education, environmental sources,
health related services, financial services, tourism,
transportation, recreation-culture-sports and other services.

In general, Indonesia's policies in services are more advanced
than its actual commitment under GATS, thus in future
negotiations the government would include more commitments or
revised ones.

Mari said the government was preparing to revise its binding
commitment to allow foreigners to control 51 percent of a bank's
shares from the 49 percent committed at the moment.

In practice, however, the country has let foreigners control
stakes in banks of up to 100 percent, she said. Thus, a binding
commitment allows the government to protect its banking sector by
stipulating that foreigners may only hold a stake of 51 percent.

Liberalizing services -- such as in shipping, finance, banking
and telecommunications -- is believed to make the sector far more
efficient and leading to a boost in the trade of goods.

The government also believes that Indonesia should accelerate
the pace of liberalization in services or risk being behind as
investment can easily move to more efficient countries.

Aside from the negotiations for expanding market access in
services, WTO member countries are also in talks to set rules
that govern the liberalization of the sector.

However, industrialized countries are more interested in
pushing for talks to widen market access, leaving negotiations on
rules in limbo, claimed the trade ministry's director for
multilateral cooperation, Djunari Inggih Waskito.

Negotiations on rules would cover such matters as emergency
safeguard measures (ESM), subsidies, domestic regulations,
services assessment method and government procurement.

Indonesia in particular was pushing to establish ESM, which
was necessary to control the inflow of services if a surge
occurred that could threaten or damage the local industry.

"We have been pushing the issue of establishing ESM for the
last seven years, only to face constant prevarication from the
developed world," Djunari said.