Rini's protectionist trade policies criticized

Rini's protectionist trade policies criticized

Adianto P. Simamora, The Jakarta Post, Jakarta

Minister of Industry and Trade Rini Soewandi has been criticized
for issuing trade policies which run counter to the
liberalization spirit of the World Trade Organization (WTO).

Such policies might do harm to the country's reputation in the
international community, experts said.

One of the much-criticized policies is a move to drastically
limit the number of sugar importers in a bid to bail out domestic
sugarcane firms who have suffered from falling prices in the
commodity at home.

However, Centre for Strategic and International Studies (CSIS)
economist Djisman Simanjuntak said imposing such a barrier was
against the rulings of the WTO, of which Indonesia is a member.

"The government must not make such policies if it wants to
regain the confidence of the international community," Djisman
told The Jakarta Post on Sunday.

He said that Rini should have used the tariff mechanism
instead.

Article XI of the General Agreement on Tariffs and Trade
(GATT) stipulates that no WTO member is allowed to impose any
prohibition or restriction on international trade other than
duties, taxes or other charges, whether made effective through
quotas, import or export licenses or other measures.

In addition to the sugar policy, Rini has also issued a number
of protectionist trade policies in the form of import licenses
for textile and steel products.

In the case of sugar, Rini issued a ruling in September last
year which drastically reduced the number of sugar importers from
800 to only four state-owned plantation conglomerates. Worse
still, the new importers have no experience at all in importing
the commodity. A few months ago, the policy was blamed for the
scarcity of sugar at home, causing a jump in the price of the
commodity.

Rini is also planning to set up a consortium to regulate the
trade of white pepper, which has been strongly opposed by the
Association of Indonesian Pepper Exporters (AIPE) because the
consortium would essentially be a monopoly.

A similar case occurred during the rule of former president
Soeharto. In 1986, the government formed a marketing body for
white pepper to market the commodity overseas. Later, a number
of exclusive agents were set up to help in the marketing of the
commodity. But this policy was then terminated following
protests from the association as the agents soon began working
together and formed a monopoly.

Indonesia is the world's largest white pepper producer.

Another Rini's controversial policy is her proposal for a
temporary ban on rice imports to help protect the financial
position of domestic producers during the harvest period. But
the policy has not been approved by the Office of the
Coordinating Minister for the Economy.

Meanwhile, chairman of the National Economic Recovery
Committee (KPEN) Sofyan Wanandi shared Djisman's opinion, adding
that most of Rini's trade policies had only created new problems
as they were taken without prior comprehensive research.

"This is a setback," he said, referring to Rini's policy in
resorting to non-tariff measures.

He said that the above trade policies were similar to those
issued by Soeharto to create monopolistic practices which only
benefited his cronies.

The anti-monopoly watchdog (KKPU) is also concerned about the
possible monopolistic practices resulting from Rini's non-tariff
approach in regulating the trade of commodities.

Separately, Fadhli Hasan of the Institute for Development of
Economics and Finance (Indef) criticized Rini for often doing
things outside of her job description because of her closeness to
President Megawati Soekarnoputri.

"This has resulted in overlapping policies," said Fadhli.

Rini MS. Soewandi's controversial policies

Sugar: Rini issued a decree on Sept. 24, 2002 that only
allows state plantation companies, private firm Rajawali
Nusantara Indonesia and Bulog to import sugar for the purpose
of curbing sugar imports and helping local farmers. Reaction:
The policy resulted in a rise in the price of domestic sugar,
which caused concern among consumers and industry players,
including the food and beverage industry. The impact on the
farmers' revenue remains unclear.

Pepper: Early this year, Rini unveiled the idea of establishing a
joint marketing body for white pepper to prop up the price of the
commodity. Reaction: The association of pepper exporters strongly
opposes the plan, claiming that it will only create a monopoly in
exports. However, the association of pepper farmers supports the idea.

Sand: In January of this year, Rini issued a decree to stop sand
exports. The policy is aimed at avoiding further environmental
damage, mainly in Riau province. Reaction: The public welcomes
the decision.

Chicken drumsticks: In April 2002, Rini proposed to open the
country's market to chicken drumsticks imported from the United
States, saying it is in line with the WTO regulation. Reaction:
The proposal sparked strong criticism from the public,
including Vice President Hamzah Haz and Minister of Agriculture
Bungaran Saragih, on fears that it could harm local poultry
farmers.

Used Clothes: In March of this year, Rini issued a decree to
ban the import of used clothes. The policy is aimed at helping
the country's ailing textile manufacturers. Reaction: The policy
has sparked protests from used clothes traders and analysts
criticized Rini for not giving clothes traders an alternative for
make a living.

Sukhoi: In May of this year, Rini appointed State Logistics Company
(Bulog) to execute the countertrade deal for the purchase of
Russian-made Sukhoi jet fighters. Rini is believed to have played
a key role in securing the deal. Reaction: Legislators suspect
irregularities in the countertrade deal and the appointment of
Bulog as the executor of the deal.