Indonesia and bilateral trade agreements (BTAs)

Abstract

This paper analyses the perspectives of Indonesian state and non-state actors towards their country's increasing tendency to use bilateral trade agreements (BTAs) as part of its foreign economic policy. Unlike the other original members of the Association of Southeast Asian Nations (ASEAN), the Indonesian government has been rather slow in pursuing a BTA policy with non-ASEAN member countries. Nevertheless, due to the proliferation of BTAs in other ASEAN countries' foreign economic policies, it was inevitable that Indonesia would pursue similar agreements with its non-ASEAN major trading partners. Despite this, it remains questionable whether Indonesia's participation in such trade agreements will produce such positive results for Indonesian economy. The attitude of the majority of Indonesian domestic constituents to date remains sceptical to this type of agreement. This is not only because BTAs create specific obligations on a range of issues, from trade and investment regimes, this trade strategy also involves deeper and more comprehensive commitments that those agreed at the multilateral level.

Keywords:

• Indonesia
• ASEAN
• bilateral trade agreements
• foreign economic policy
• state and non-state actors.

Acknowledgement

The development of this paper was made possible through funding provided by the Integrated Rural Development Foundation (IRDF) of the Philippines and the assistance of Wawan Fahrudin and Lutfiyah Hanim from the Institute for Global Justice (IGJ), Jakarta, during the conduct of field research. The author would also like to acknowledge the contribution of anonymous referees in providing the necessary suggestion in the making of the final draft of the paper.

Dr Alexander C. Chandra is the Programme Officer for Research Division at the Institute for Global Justice (IGJ), Jakarta, Indonesia. His research interests include Southeast Asian regionalism, foreign economic policy, nationalism and ethnonationalism, WTO's non-agricultural market access, and international political-economy.

Notes

1. ASEAN is a regional organization that was formed in 1967. The organization is currently made up of ten Southeast Asian countries, namely Indonesia, Malaysia, Thailand, the Philippines, Singapore, Brunei, Vietnam, Burma, Cambodia and Laos.

2. An interview was conducted by the author with Tan Weiwen, the Economic Counsellor of the Republic of China Embassy, on 30 July 2004, in Jakarta.

3. An interview was conducted by the author with Michihiro Kishimoto, First Secretary Commercial of the Japanese Embassy, on 28 July 2004, in Jakarta.

4. An interview was conducted by the author with the Economic Officer of the Korean Embassy who wished to remain anonymous, on 4 August 2004, in Jakarta.

5. By the time this article is submitted for publication, the Co-ordinating Minitry for Economy is headed by Aburizal Bakrie, a former President of the Indonesian Chambers of Commerce and Industry (KADIN). Although he was known formerly as proponent of economic nationalism, Bakrie, along with President and other key economic ministers, has been at the forefront in supporting neo-liberal economic policy within the Susilo B. Yudhoyono's administration.

6. An interview was conducted with Bambang Guritno, Director of the Directorate of ASEAN Cooperation, on 22 July 2004, in Jakarta.

7. An interview was conducted by the author with Ansari Buchori, Secretary of the Directorate General for Metal, Machine, Electronics, and Miscellaneous Industries, on 3 August 2004, in Jakarta.

8. An interview was conducted by the author with Sri Ernawati, Expert Ministerial Staff on International Relations, on 5 August 2004, in Jakarta.

9. An interview was conducted with Dr Luky Eko Wuryanto, Director of the Directorate of Industry, Trade and Tourism, on 30 July 2004, in Jakarta.

10. Interviews were conducted with Dr Didiek J. Rachbini, Member of the Commission VI, DPR, on Trade, Industry, Investment, Co-operative, SMEs and State-Owned Enterprises (SOEs), on 20 April 2005, and Dr Ir. H Dradjad H. Wibowo MEc, Vice-Representative of the Commission XI, DPR, on Finance, National Development Planning, Banking and Non-Banking Financial Institutions, on 3 May 2005. Both interviews were conducted in Jakarta.

11. Dr Dradjat Wibowo also explained that the reason Indonesia took aggressive measures to promote BTAs was due to the fact that BTAs were in compliance with the notion of trade liberalization which, along with macro-economic stability and privatization, are parts that make up the requirement to secure loans from international financial institutions (IFIs), such as the IMF and World Bank.

12. Several members of the academic community were interviewed, which include: (1) Dr Hadi Soesastro, the Director Executive of the Centre for Strategic and International Studies (CSIS), 23 July 2004; (2) Dr Marie Pangestu, Senior Researcher at the CSIS, 9 August 2004 (Dr Pangestu currently holds the position of the Indonesian Trade Minister under the Yudhoyono's administration); (3) Professor Lepi Tarmidi, Director of APEC Study Centre, University of Indonesia, 19 July 2004; and (4) Dr Umar Juoro, Senior Fellow at the Habibie Centre, 25 August 2004. All interviews with members of the academic community were conducted in Jakarta.

13. Three representatives of Indonesian business associations were interviewed, which include: (1) Dr Erwin Elias, the Chairman of the Indonesian Small Business Exporter Consortium (ISBEC), 2 August 2004; (2) Dr Sofjan Wanandi, the Chairman of the Indonesian Entrepreneurs Association (APINDO), 10 August 2004; and (3) Teddy Sukardi, the Chairman of the Indonesian Association of Telematics Software (ASPILUKI), 10 August 2004. All interviews with the representatives of these Indonesian business associations were conducted in Jakarta.

14. There were eight respondents from eight different Indonesian NGOs/CSOs interviewed, which include: (1) Riza Tjahjadi, National Co-ordinator of the Pesticide Action Network (PAN), 21 July 2004; (2) Wardah Hafidz, Co-ordinator of the Urban Poor Centre (UPC), 22 July 2004; (3) Sumyaryo Sumiskun, Director of The Assemblage of Indonesian Fishermen (HNSI); (4) Farah Sofa, International Corporate Campaign Co-ordinator of the Indonesian Friends of the Earth (Walhi), 23 July 2004; (5) Hikayat Atika Karwa, Chairman of the Federation of Labour Union on Metals, Electronics, and Machinery (FSP-LEM); (6) Indah Sukmaningsih, Director of the Indonesian Consumer Group [Yayasan Lembaga Konsumen Indonesia (YLKI)], 29 July 2004; (7) Yopie Handjaja, Uni Social Democrat (Unisosdem), 4 August 2004; (8) Setiono, Director, Labour Union for Jakarta, Bogor, Tangerang, and Bekasi (SBJ), 4 August 2004. All interviews with the representatives of Indonesian NGOs/CSOs were conducted in Jakarta.