M. Taufiqurrahman, Jakarta – Indonesia, hobbled by graft and slack bureaucratic coordination, has a long way to go before it can adopt a United Nations Development Program (UNDP) plan to offset the negative impact of the liberalized world trade order, economists say.
Tirta Hidayat of the University of Indonesia said a stepped-up corruption eradication drive was a more pressing concern than the various industrial policies contained in the eight-point Trade on Human Terms report launched by the UNDP on Wednesday.
"The business community here considers corruption eradication as the top priority... and industrial policy comes at the bottom of the government's to-do list," Tirta told a discussion held after its release.
The report – the first to link trade and human development for Asia and the Pacific region – recommended the agenda for less developed countries in the region to engage more productively in the international trading system.
The agenda consists of investing for competitiveness, adopting strategic trade policies, restoring a focus on agriculture, preparing a new tax regime, maintaining stable and realistic exchange rates, staying with multilateralism and cooperating with neighbors.
Investing in competitiveness, for instance, can be done by building roads, railways, ports and telecommunication systems aligned with the requirement for transporting goods and services quickly and cheaply to international markets.
The report was made to highlight the imbalance within and among countries that results from further liberalization of international trade, and proposes ways to mitigate its effects.
It highlights the fact that while the Asia Pacific economy as a whole created 337 million jobs in the booming 1980s, it managed to create barely half of that – 176 million – in the 1990s, the period coinciding with trade expansion.
In the case of Indonesia, the results of liberalization have been dramatic, the report said. Indonesia, which was self-sufficient in rice during the 1980s, imported on average 10 percent of its national needs between the period of 1988 and 2000.
It had 5 million soybean producers in 1996, but the number had dropped to 2.5 million by 2001, due to the inroads of imported products, especially from developed countries, the report said.
Senior economist Hadi Soesastro of the Jakarta-based think tank Centre for Strategic and International Studies (CSIS) said that the administration of President Susilo Bambang Yudhoyono would have problems implementing the terms because it first had to grapple with implementing effective governance.
"The UNDP must be applauded for drawing up the action plan but it will remain as such on paper, because the government would have problems coordinating such a comprehensive policy. Coordination is a scarce commodity these days," he said.
In her keynote speech, Trade Minister Mari Elka Pangestu said that imbalance in the world trading system hampered developing countries from initiating human development plans. She urged developed countries to understand their unique position during trade negotiations.
"Developing countries must have the room to still continue to have specific and targeted protection for special products that are protecting their rural livelihood, food security and poverty alleviation," she said.