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.