Minister says bureaucracy major hurdle for exports

By Riyadi

MEXICO CITY (JP): Minister of Industry and Trade Tunky Ariwibowo vowed to continue reducing domestic hurdles of exports to maintain the competitiveness of Indonesia's goods on the global market.

Tunky said here Thursday that his first priority to boost exports is to cut and smoothen bureaucratic procedures because they remain the main hurdle for exports and incur additional costs to exporters and companies in general.

"We realize that our bureaucracy remains a problem for exporters, and we have to deal with it because our main objectives are to boost exports, exports and exports," Tunky told journalists here.

The minister left Mexico City for Washington D.C. on Thursday, ending his two-week trade mission to Latin America. During the mission, Tunky was accompanied by 35 business people from Indonesia.

Tunky said that a series of deregulation measures taken by the government since the early 1980s have given Indonesia's economy the right direction. However, there are a lot of discrepancies in the implementation of such deregulation measures.

"Our deregulation policy is just right to boost exports. However, it often encounters problems in its implementation, especially when there is an interface between government officials and business people," Tunky said.

Mending domestic problems, the minister continued, is much more important for Indonesia to undertake because they directly influence the performance of Indonesia's exports.

"Our deregulation team has been assigned to assess the problems of implementing deregulation measures in the field. And based on the assessment, we will be able to take the right measures to tackle it," he said.

Tunky said earlier that Indonesia's huge protected market serves as a liability in some cases because leading businesses are becoming so intoxicated by the protection that they are reluctant to compete abroad. Therefore, he promised to reduce the level of protection on the domestic market to force businesses to compete globally.

As for overseas hurdles for exports, such as tariffs and nontariff barriers, he added, there are multilateral efforts being made to reduce them and Indonesia is actively participating in such efforts.

Complacency

Separately, Chairman of the Indonesian Chamber of Commerce and Industry Aburizal Bakrie said that the "complacency" attitude among Indonesia's bureaucrats and business people discourages them from making improvements in the domestic business environment.

"This attitude will eventually slowdown exports because the officials and business people are satisfied with the current conditions," Aburizal said.

Consequently, he said, they -- especially those who benefit from the protected domestic market -- will tolerate any ill practices, such as illicit payments which amount up to 20 percent of real business costs, less-than-transparent decision-making processes in government deals, a slowdown in granting licensing and other factors affecting high cost economy.

Whenever Indonesia can reduce the costs of doing business in the country, Aburizal said, it will gain more benefits from more inflows of foreign direct investment and from more exports, which are increasingly competitive.

"However, if such complacency continues overwhelming officials and business people, I'm afraid our export performance will not improve significantly," Aburizal said.

According to Tunky, the growth of Indonesia's nonoil exports slowed down slightly during the first months of this year, compared with the same period last year.

Nonoil exports, for example, grew by 13.08 percent to US$18.07 billion during the first semester of this year from $15.98 billion in the same period last year, which represented a 15.23 percent increase over the same period in 1994.

Indonesia began enjoying a surplus in its international nonoil trade in 1993 with $846.8 million after suffering continuous deficits from 1989 to 1992.

Indonesia again booked a surplus of $743.7 million in its nonoil trade in 1994, but again suffered a deficit of $2.76 billion last year. During the first six months of this year, Indonesia has already suffered a deficit of $1.7 billion in its nonoil trade.