Indonesia needs to improve its competitiveness before joining TPP

Indonesian government had held a meeting with all stakeholders to discuss their preparation for joining the Trans-Pacific Partnership (TPP) at the Centre for Strategic and International studies (CSIS) in Jakarta on Wednesday, as Indonesia has to vastly improve the competitiveness of industrial sectors.

According to the coordinating economic minister’s deputy for international economic and financial cooperation, Rizal Affandi Lukman, in order to improve competitiveness the government needs to remove various barriers, including logistics problems and the difficulty of acquiring land for industrial sites.

As an example, he added, the government would examine the textiles and textile products industry and the footwear industry to improve their competitiveness.

By strengthening technology innovation in textiles and footwear, their products will be competitive abroad, in countries such as Vietnam.

He expressed optimism that all problems could be resolved before Indonesia joined the trade pact in the next two years. However, he admitted that it would take time to issue all the regulations needed to meet the standards set in the trade pact. It is because they need the House of Representatives to set up the regulations.

For example, the TPP’s investor-state dispute settlement (ISDS) allows investors to sue the government in international arbitration, while Indonesia’s investment laws require consent from disputing parties before a matter is taken to international arbitration.

This is what they should strive for, Rizal said, adding that the government was still itemizing regulations that needed stripping back in order to meet the TPP’s standards.

Earlier, the Indonesian Textile Association (API) and the Indonesian Footwear Association (Aprisindo) had asked the government to join the TPP in order to make local textile products more competitive with those of Vietnam, a TPP-participating country.

PT Mustika Ratu president director Putri Kuswisnu Wardani warned that aside from the prestige of joining the TPP, the government should consider the climate in domestic industry. According to her, there are many burdensome labor policies and pro-imports policies. There needs to be fine-tuning for them to conform to TPP standards.

President Joko “Jokowi” Widodo’s stated intention of joining the TPP during his White House visit last month has sparked debate about the pros and cons of the deal and the highly secretive nature of the negotiations.