RI told to tackle problems outside WTO
JAKARTA (JP): Indonesia must address its investment, competition and environmental problems despite rejecting their inclusion on the agenda of the coming Word Trade Organization (WTO) meeting, experts said yesterday.
Hasan Kartadjoemena, Indonesia's former ambassador to the General Agreement on Tariffs and Trade (WTO's predecessor), warned yesterday that sooner or later these contentious issues would make their way into WTO negotiations.
"Indonesia should address these issues domestically because they will eventually end up on the WTO table as most major trading countries will continue to push these issues forward," Kartadjoemena told a seminar hosted by the Indonesian Forum.
The government has repeatedly said it would block efforts to raise human and labor rights, investment, competition policy, government procurement and other contentious issues at the first WTO ministerial conference in Singapore next week.
Kartadjoemena commended the government's persistent rejection of efforts to link trade and non-trade issues because Indonesia was not ready to face the link.
"However, in the context of our domestic policy, we must address them... especially because our economic structure is so oligopolistic," Kartadjoemena said.
He said the government must encourage domestic competition to overcome monopolies and oligopolies.
The government must also empower small and medium-size enterprises to help drive the economy and exports, he added.
"The fact is that most large businesses here are not exporters because they mainly play in heavily protected domestic markets," Kartadjoemena said.
Businessman Iman Taufik, an executive of the Indonesian Chamber of Commerce and Industry, agreed yesterday saying that most local businesses were not ready to face free trade.
Iman said investment liberalization would hurt local business while benefiting foreign firms because they would be free to enter all industries.
"Just look at the electricity sector, which has been opened to foreign investment. The state electricity firm PT PLN has to bear higher costs because it is required to buy electricity from private generators," Iman said.
He warned the multilateral investment agreement proposed by the European Union could encroach on the country's economic sovereignty because the government's authority to regulate investment would be severely limited.
If this treaty is adopted by the WTO, it would be automatically legally binding, requiring member countries to make their national policies according to the treaty.
"Once it enters the WTO, it will be difficult to change because amending a WTO agreement requires the approval of two thirds or three quarters of the membership and also major trading countries," Iman said.
He said Indonesia should stick to its guns on investment policy because, once it was regulated by the WTO, stronger country's might have a mechanism to economically colonize weaker ones.
"Therefore investment promotion is a priority, while liberalization must be done through a proper process," Iman said. (rid)