JAKARTA, KOMPAS — Indonesia needs to resolve various obstacles and problems in the country to compete with other countries and realize its economic potential. In addition, the government has to further identify Indonesian products that have the potential to enter the United States market to replace products previously imported from China.
These measures are needed in anticipation of a prolonged trade war between the US and China. Many people are hoping for a breakthrough to be achieved during the upcoming meeting of US President Donald Trump and Chinese President Xi Jinping. The two leaders are scheduled to meet at the G-20 summit in Osaka, Japan, this weekend.
The US-China trade war is one of several risks to the global economy, because it creates uncertainty.
The chairman of the Board of Trustees of the Indonesian Employers Association (Apindo) Sofjan Wanandi said the investment climate must be improved to enable Indonesia to seize investment opportunities and increase its competitiveness. He expressed hope that Trump and his Chinese counterpart would reach a durable settlement.
"The US-China trade war is not only related to trade and tariffs, but also to competition in technology," Sofjan said in Jakarta on Wednesday.
PT Adaro Energy Tbk\'s vice president commissioner Teddy P Rachmat believes that, in the midst of global economic uncertainty, Indonesia was still able to attract investment and expand export markets.
"Don\'t lose to Vietnam," Teddy said. On the Ease of Doing Business Index 2019 issued by the World Bank Indonesia ranks 73rd out of 190 countries, lower than Vietnam, which is in 69th position.
Self-assessment
To take advantage of the export market left by China, the government needs to identify Indonesian products that have the potential to penetrate the US market.
Trade Ministry secretary-general Karyanto Suprih said the ministry was studying the preferences of US consumers as part of its efforts to boost exports to the country. "Although the world economy is predicted to slow down and will further weaken global trade, we must continue to look for opportunities," he said.
The World Bank projects world economic growth this year at 2.6 percent, while the International Monetary Fund estimates the global economy will grow by 3.3 percent. The Trade Ministry \'s director general for national export development, Arlinda, said market studies in the US also involved trade attachés and the Indonesian Trade Promotion Center (ITPC) in Chicago and Los Angeles.
The interim study showed that Indonesia could export textile products, because it imports cotton from the US. Handicraft products, furniture and footwear also had the potential to enter the US market.
According to Ni Made Ayu Marthini, the director of the bilateral negotiations at the Directorate General of International Trade Negotiations, the government will encourage industry players to increase exports
to the US after the results of the study are obtained. Based on data on the Trade Ministry’s website, the trade balance with the US saw Indonesia achieve a surplus of US$8.26 billion in 2018.
Three issues
Rizal Affandi Lukman, undersecretary for international economic and financial corporation at the Office of the Coordinating Economic Minister, and Indonesia’s representative at the G-20, said at least three priority issues would be raised by Indonesia at the G-20 summit in Osaka.
Those three issues were a response to the US-China trade war, the digital economy and sustainable human development.
At the G-20 summit, Indonesia will express support for international trade based on the multilateral system and stress that trade and investment are important sources of growth for the majority of countries in the world.
"In the draft declaration of the leaders, it will be stated that the G-20 member countries have agreed to reduce the uncertainties of global trade at present. The agreement is an important step," Rizal said.
Meanwhile, the United States hopes to resume trade negotiations with China through a meeting of President Trump and President Xi in Osaka. However, the opportunity for talks on tariffs the US has imposed on China at the meeting has been closed. Trump\'s advisers said there were no expectations of trade agreements at the meeting, but they were expected to find a way for further talks.
Ahead of the G-20 summit in Osaka, Asahi Shimbun published the draft of the G-20 communique, which suggests the G-20 countries will promote free trade and technological innovation as the main drivers of economic growth.
The document is still awaiting a response, especially from countries in Europe, to fight the trend of protectionism globally. (AFP/REUTERS/BEN/KRN/JUD/FER)