Will Indonesia be a new member of TPP?

(Baonghean.vn) - President Joko Widodo said he will decide whether Southeast Asia's largest economy will join the US-led Pacific trade agreement after meeting with President Obama at the White House today (October 26).

Indonesia will soon decide whether to join the TPP, an agreement that currently includes 12 member countries, after the Joko-Obama meeting. Photo: Internet.

In an interview ahead of a four-day visit to the United States this week, Mr. Joko said his government was moving quickly to remove cumbersome protectionist trade regulations that foreign businesses have long complained about.

“I am a businessman,” he said, recalling his career as a furniture exporter before launching his political career as mayor of a city in Central Java. “I know what they want, what they need. I want to say that Indonesia is open to investment and investors.”

If Indonesia, a G20 member with an economy worth about $1 trillion, joins the trade pact, it would be a boon for Washington.

The Trans-Pacific Partnership (TPP) is seen as a bulwark against China’s influence in the region. Without Indonesia, the agreement would have covered two-fifths of the world economy, including the United States and 11 other Pacific Rim countries.

Indonesia’s Trade Minister Thomas Lembong said the country could be ready to join within two years, expressing concern that the country could fall behind its neighbors who have joined the TPP, including Australia, Brunei, Malaysia, Singapore and Vietnam.

The TPP deal must be approved by Indonesia’s parliament. But other members of Mr. Joko’s cabinet, as well as some lawmakers, have been less optimistic, leaving the Indonesian president with a difficult decision.

“After discussing this issue with President Obama, I will make a decision. Let’s wait and see,” Mr. Joko said in an interview on October 22.

The main focus of the visit is trade - Mr Joko is looking to attract billions of dollars in foreign investment - and he and Mr Obama are expected to announce a number of business deals.

However, concerns remain in Washington about longstanding barriers to doing business in Indonesia, slow business approvals and operating permits, corruption and an unpredictable legal system.

Indonesian President Joko Widodo at a primary school in Jakarta last week. Photo: Reuters.

Since Mr. Joko took office a year ago, his government has added regulations, requiring foreigners to be fluent in Bahasa Indonesia to obtain work permits, requiring multinational companies to employ 10 foreigners for every 10 Indonesians, and requiring visiting foreign businesspeople to obtain special permission to hold meetings at company offices in Indonesia. The last rule has forced some executives to hold meetings in restaurants in Jakarta, or in neighboring Singapore.

In July, Mr Joko's government raised tariffs on more than 1,000 imported items, from cars to judo belts.

However, Mr Joko insists his government has changed and started removing obstacles that make it difficult for foreign businesses.

Last August, with the economy growing at its slowest pace since 2009, the rupiah at its lowest since the late 1990s, and the president's approval ratings falling, Joko reshuffled his cabinet, replacing key economic ministers.

Since then, his government has enacted five separate deregulation packages, including regulations aimed at simplifying and cutting down on licensing, a new minimum wage formula and tax reform.

Mr Joko said he had also revoked regulations requiring foreign workers to be fluent in Bahasa and for visiting businessmen to obtain permits to hold meetings at the office.

That’s just the beginning. “Every two weeks at the most, we’ll have a new economic package” to deregulate the economy, he said.

Foreign businesses have welcomed the moves, saying they will enjoy equal benefits in Indonesia, and have called for more regulations to be removed.

Murray Hiebert, a South Asia expert at the Center for Strategic and International Studies in Washington, said that Indonesia’s size is a plus for foreign investment. However, “compared to Vietnam or Singapore, Indonesia is a difficult place to do business.”

However, Mr. Joko still cherishes hope for this visit, especially about the US investment in Indonesia's e-commerce sector, which according to analysts could receive tens of billions of dollars in new investment in the next 5 years. The Indonesian President plans to fly to San Francisco on October 28 to visit Silicon Valley, visit Google headquarters, and have dinner with Tim Cook - CEO of Apple.

In Washington, Mr. Joko and Mr. Obama are expected to sign memorandums of understanding on maritime and defense cooperation, as well as energy issues. The two leaders will discuss strengthening cooperation to deal with violent extremism, climate change and territorial disputes in the South China Sea.

Faced with China's recent aggressive attitude, Mr. Joko affirmed that he wanted Indonesia to maintain a neutral role in order to promote the early signing of a code of conduct in the East Sea.

“Dialogue is absolutely essential to solving this problem,” he said. “We need to start detailing the content” of the code, “element by element, and implementing it. It took us 13 years — that’s a lot of time.”

Thu Giang

(According to New York Times)