Government asks businesses to cooperate as
global recession looms
Dian Septiari
The Jakarta Post
The government is encouraging businesses to
contribute to the building of a resilient economy
amid geopolitical challenges and a looming
recession, asking them to work together to
negotiate free trade agreements like the one with
the European Union and a flagship initiative
linking together a number of FTAs in the region.
The world is currently experiencing an
economic slowdown. Foreign Minister Retno LP
Marsudi told members of the Indonesian
Chamber of Commerce and Industry (Kadin) at
a coordination meeting in Jakarta on Tuesday,
citing an International Monetary Fund forecast
that places global economic growth at a meager
3.2 percent this year.
The IMF has also projected that around 90
percent of all countries including Indonesia will
experience slower growth – in its 2019 World
Economic Outlook published in October, the
world monetary body slashed predictions of
Indonesia’s rate of gross domestic product
expansion to just 5 percent, down 0.2 percentage
points from an earlier forecast in April.
Observers have singled out the protracted trade
war between the United States and China as one
of the biggest contributing factors of the global
economic slowdown . Retno said the
government must work hard to benefit from the
fallout, with businesses playing a significant
supporting role.
According to Japanese investment bank
Nomura, Indonesia was not considered a first-
choice destination for companies looking to
relocate their production facilities when the
trade war first erupted, and President Joko
“Jokowi” Widodo repeatedly expressed his
concern on the matter.
“The world we face is not going to be easy. We
hope that you can work together with the
government to make Indonesia's resilient
economy stronger, so that we will be able to
survive,” Retno told business leaders.
The minister said she wasn’t going to allow
Indonesia to remain a big market from which
other countries benefit, and instead would use
the country’s market size and large population as
leverage in negotiating trade agreements, “so
when we negotiate, we get win-win results”.
Jokowi has asked his Cabinet to deliver
increased exports and investments for his second
term, further cementing economic diplomacy as
the Foreign Ministry’s number one priority.
As a result, reducing trade barriers through
agreements such as the Regional Comprehensive
Economic Partnership Agreement (RCEP) and
the Indonesia-EU Comprehensive Economic
Partnership Agreement (CEPA), have moved up
the list of priorities in spite of the complications.
The RCEP negotiating text was finalized at a
region-wide summit earlier this month, with a
view to having its 15 participating countries sign
the ambitious deal next year in Vietnam. India,
which held reservations on several provisions in
the draft agreement, pulled out at the last minute
but indicated it could still rejoin the endeavor if
its demands were met.
Even without India, the RCEP bloc would chapter on sustainable development,” Shinta
amount to almost a third of the world’s total said on Tuesday.
GDP, although in terms of market size a deal
without India would account for just under 30 “There are two sides of the story but also a tug
percent of the global population, compared with of war, but whatever the case we have to
nearly half if India had remained in the fray. continue negotiating this deal as it will take
time, and if we stop we will lose out to
“This is the challenge, and we can't be taken Vietnam.” Sinta added (tjs)
hostage; it's been more than seven years of talks.
All of the negotiators want to get as much as
possible [out of the deal] but it's impossible to
get everything,” Minister Retno said.

She also underlined the “asterisk on palm oil”,

which has put a strain on the already tenuous
relationship between Jakarta and Brussels
despite the former’s target to conclude
negotiations on the IEU-CEPA by next year. P.S :
The EU announced in March a plan to Statement, Direct Speech
completely phase out imports of palm oil, the
world’s most ubiquitous and economical
Statement, Indirect Speech
vegetable oil, by 2030. The bloc considers palm Command, Indirect Speech
oil a high-risk commodity because of alleged
impact on deforestation, while for Indonesia it is
a staple good that helps support the livelihood of
millions of people, particularly smallholder
farmers.

Commenting on the IEU-CEPA, Kadin vice

chairwoman for international relations Shinta
Kamdani said that negotiations should go on in
spite of disagreements on the palm oil issue.

On the one hand, the deal would provide

benefits to Indonesia’s labor-intensive sectors
like textiles and footwear, which have so far
been unable to compete with countries like
Vietnam. At the same time, however, Shinta
asked the government to be careful about palm
oil, and said the issue wasn’t likely to be
resolved in the short term.

“This is indeed a very complicated problem that

[...] will be discussed in the [CEPA’s] special