Open Trade Policy Helps Indonesian Economy Recover

Open Trade Policy Helps Indonesian Economy Recover

Indonesia needs to implement an open trade policy and minimal restrictions to help restore its economy. The ongoing global economic recovery process was disrupted by several things, one of which was the Russian invasion of Ukraine, which disrupted the smooth supply chain. Indonesia needs to consistently demonstrate its commitment to international trade through open trade. Open trade can facilitate the supply of raw materials and minimize the impact of rising prices for various commodities.

Although actively involved in various international cooperations, the government still enforces a fairly protective trade system and imposes non-tariff barriers. This kind of policy, he continued, will not have a positive impact in the long term because Indonesia still needs imports for various raw materials. The application of non-tariff barriers in Indonesia can lead to an increase in production costs. This has an impact on the decline in the competitiveness of Indonesian products in the international market. In addition, the inefficient loading and unloading process also causes time and economic losses.

“It must be admitted that Indonesia still needs imports to support the industry. However, this is indeed necessary to add value added products that will increase competitiveness. In the end, this will have an impact on our economy, because it can invite investment, create more jobs and encourage national consumption,” he said. The government also needs to cut regulations that hinder investment and hinder Indonesia’s export performance. The inflow of investment is expected to stimulate the national economy, move strategic sectors and open up opportunities for cooperation with governments and companies from other countries.

Uncomplicated and time-consuming bureaucracy, restrictions on quotas and permits, and other non-tariff barriers will have a negative impact on investment and export value and in turn can affect the Indonesian economy. Furthermore, in relation to food security, the application of non-tariff barriers has an impact on the prices of basic commodities, such as rice and beef, which will reduce affordability and affect nutrition and calorie intake, especially for low-income people.

The pandemic has caused many producing countries to hold back on their exports because they prioritize domestic needs. This action makes importing countries threatened with shortages in supply of certain commodities and in the end can cause shortages. Meanwhile, the factor of climate change also played a role in the stagnation of food supply from producing countries.

For example, soybeans, whose imports were affected by the disaster in the United States, and beef, whose imports were said to have stalled due to the recent forest fires in Australia. Indonesia needs a system that can respond to the need for food imports quickly without having to go through a long process. This is important because the timeliness of imports is closely related to the price, affordability of the community, and the harvest period of farmers. Indonesia also needs to explore trade with various countries to increase trading partner options. This diversification will help reduce dependence on commodity supply in one country only.