Remarks by Ms Shinta Widjaja Kamdani, Chair of the Permanent Committee on International Trade Cooperation, Kadin Indonesia, at
the WTO Forum at the XXX Hotel, Jakarta, on 12 August 2008. Mr Chairman
Dr Mari Pangestu, Minister of Trade My fellow speakers
Ladies and Gentlemen
Let me first convey to you the good wishes of the President of Kadin Indonesia, Mr MS Hidayat, who has asked me to take his place today because of a previous engagement.
I would like to start by thanking the Minister of Trade, Dr Mari Pangestu, and the national team who prepared and negotiated our position at the very difficult Mini-Ministerial Meeting in Geneva last month. They obviously worked tirelessly and fought very hard for a balanced outcome in the
interests of Indonesia and the developing countries of the G33. It was very unfortunate that a deal could not be achieved.
Today, I would like to reconfirm Kadin’s support for the Indonesian Government’s position in the WTO negotiations and our strong hope that the major parties can go back to the negotiating table as soon as possible to finish the task before them.
We regret very much that the breakdown in negotiations was attributed to the Special Safeguards Mechanism because we think that a balanced SSM is fundamental to a package that would enable the DDA to be called a “development round”.
We hope very much that our friends in developed economies will
understand that an adequate safety net for the millions of small farmers in Indonesia and other developing countries is vital. It is very different to the situation of some developed countries where their concern is weaning big farm interests off billions of dollars of subsidies.
For countries like Indonesia, an adequate safety net is not just about saving farmers and their communities from a sudden fall into poverty. It is
necessary for the stability of our overall development strategy and our ability to implement policies for long term reform and modernization of the farm sector. For us, SSM is a process of last resort and we hope that we will not have to use it.
Ladies and Gentlemen, while many of us may be dismayed and even cynical about the WTO process, Kadin believes the WTO is an important pillar of international stability for the business sector and for our economic development in Indonesia. It is worth supporting.
Our growth in the Asia Pacific region over many decades has been built on the solid foundations of this multilateral trading system.
By fighting for a balanced deal in these negotiations, we have the
opportunity of continuing to strengthen the foundations for future decades. Indonesia needs a predictable market place as well as the clear rules and the credible dispute settlement mechanism that the WTO can give us.
Ibu Mari may be right when she says that “multilateral negotiations don’t fail, they just continue”. But one of the costs of not concluding the DDA after seven years is already evident – that is the tremendous growth of preferential trade agreements.
One by one, bilateral FTAs can open up our export markets more quickly than the multilateral system. And regional FTAs like ASEAN Economic Community and ASEAN plus agreements can provide predictable paths to integration with our regional neighbors.
But in total, the rapidly growing “noodle bowl” of FTAs across our region and the rest of the world does not provide the predictability and order that is best for Indonesia over the longer term.
In fact, business in Indonesia is even feeling defensive about the prospects of the two most important FTAs that we have joined – the ASEAN
Economic Community and the EPA with Japan. It is difficult to define our business strategies on a piecemeal basis and in an environment where we miss out if we do not join FTAs. I know that it is also difficult for the government to actually negotiate these agreements in our best interests. Ladies and Gentlemen, despite the imperfections and complexities of the WTO process and the difficulties of negotiating with the big players, Kadin believes that Indonesia should be at the forefront in leading the negotiations to a satisfactory conclusion as soon as possible.
We hope that the negotiations can be restarted after the northern summer break and substantially concluded this year but we know that politics may prevent this.
In any case, we should ourselves be ready to make a final deal.
Kadin is prepared to work with the Government to further strengthen our position, if that is necessary, especially in the area of services. We believe there is room to strengthen our offers as well as our requests.
But I would like to stress that we should not be primarily driven by the negotiations in forming a stronger position. Our negotiating position on services should be rooted in our own strategies for growth and
development. Our goal should be to build top class services because we know they are crucial in a growing economy.
The key questions in developing a stronger services position should therefore be:
• How do we want to grow a particular sector?
• In what ways can we lower the cost of doing business or build our capacity by making the services sector more efficient?
• How can we improve regulation and transparency?
• What sort of schedule for reform would give our local investors a good chance to be part of the growth?
• At what point does “policy space” or the gap between our GATS commitments and our actual regime become a signal to investors that we are not really committed to reform?
I know that we cannot be ready with all the answers in the next few weeks but at least we should be thinking of these questions because they give us a rationale and more confidence in forming our position for negotiations. Ladies and Gentlemen, it is the business sector that has the pivotal role in transforming greater openness from liberalization into growth and
opportunity. This means competing more efficiently in both overseas and domestic markets.
We see from many indicators, including the World Bank Doing Business Index and the DPPOD Index of the performance of our provinces that we are not providing a level playing field for businesses in Indonesia compared with other countries.
Improvements are being made and more reform is underway. However, Kadin strongly believes that our liberalization strategies in the WTO and the FTAs must go hand in hand with real improvements in Indonesia’s competitiveness. This means, among other things, more basic
infrastructure, better regulation and less red tape, and more transparency in administration.
This is especially important for our small and medium businesses which have the potential to be part of international production chains. Kadin believes it is vital that these improvements also be made in the regions where business is often more handicapped by a poor business environment. In this respect, Kadin urges all government departments and regional administrations to think of our strategies for the WTO and FTAs as building our ability to compete as well as taking down the barriers to foreign competition.
All businesses can proceed more confidently if we take this approach. Let me conclude at this point by stressing again Kadin’s view on the key issues surrounding the DDA.
First, we must understand that WTO is a reality and we have a strong interest in Indonesia in making it work. At this critical point, we should continue to show leadership to conclude the DDA and make every effort to build in safety nets for our most vulnerable.
Second, Kadin is prepared to work with the government to make sure we are ready for a final deal. We think there are opportunities to strengthen our offers and requests in services if required but we need to think of this in strategic and business terms.
Third, Kadin believes that a successful outcome in the WTO provides the best way of stemming the rush toward preferential trade deals which are now making life very complex for business.
Fourth, Kadin believes that all governments share a responsibility to build a better business environment as they take down the barriers. This is
especially important for small and medium businesses and in the regions which Kadin sees as being more handicapped by poor government
performance.
Finally, Ladies and Gentlemen, Kadin will continue to support the
Government at this important time and will communicate our views to our counterparts in developed countries so that they will be clear about our concerns and resolve.
Thank you
