Khoirul Amin, Jakarta – The government intends to voice its concerns and negotiate a few issues with the Trans-Pacific Partnership (TPP) signatories before officially joining the US-led multilateral trade cooperation.
The Trade Ministry's director general for international trade and cooperation, Bachrul Chairi, said on Wednesday that it would take another year for TPP ratification to be completed and during that time the government would thoroughly discuss its concerns surrounding the TPP.
"Indonesia will probably be ready to join the TPP in two years, but there's still a legal gap concerning the matter of state-owned enterprises [...]. We want to negotiate that," he said.
Under the "state-owned enterprises" clause, the TPP treaty requires member countries to ensure equal treatment for state-owned enterprises (SOEs) and private businesses, especially when SOEs receive government backing to engage in commercial activity.
Bachrul said the government would negotiate the matter, especially given the fact that the Constitution mandated that the state was to control natural resources for the people's welfare.
Investment Coordinating Board (BKPM) head Franky Sibarani said there were also a number of concerns regarding investment.
"Under our Investment Law, before [investors] go to international arbitration, there must be a discussion with the Indonesian government [...]. This is what will be a lot of work for us," he said.
Under the "investor-state dispute settlement" (ISDS) clause in the TPP treaty, investors may directly proceed to international arbitration should local governments' regulations harm their businesses in the investment-recipient countries.
Bachrul said that while Indonesia was not a TPP signatory, the partnership was probably open to negotiation in order to expand its membership. The partnership will likely come in force in a year, with South Korea becoming a non-current TPP signatory member ready to join.
Negotiations on the TPP were concluded in October last year by 12 signatory countries, namely Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam and the US.
The TPP draft was both welcomed and challenged by Indonesian business players and analysts. Mahmud Syaltout, an international trade law and policy expert at the University of Indonesia, said previously that joining the TPP could harm Indonesia's agriculture sector.
ASEAN Solidarity Economic Community (ASEC) Indonesia has also summarized discussions by a number of experts and members of the public, saying that the country's state enterprises played a major role in economic development and there was a number of infant businesses that had to be protected.
The association also mentioned that emerging markets Brazil, Russia, India, China and South Africa that were also members of the G-20 did not join the TPP-bandwagon.
Textile business associations, meanwhile, highlighted benefits for Indonesia's textile and footwear industry if the country joined the TPP as the products would be subject to 0 percent tax, making Indonesia competitive with regional counterpart Vietnam, which had joined the TPP.
Bachrul said that to further review benefits and negative impacts of joining the TPP, the government agreed on Wednesday to officially form teams to review future trade agreements and partnerships.
The agreement was reached after a meeting attended by Franky, Trade Minister Thomas Lembong, Industry Minister Saleh Husin, Finance Minister Bambang Brodjonegoro and Coordinating Economic Minister Darmin Nasution, among others.