Trading Strategy Is Needed

Kompas/Priyombodo

Activists check rice imported from Vietnam with State Logistics Agency (Bulog) labels on it from Singapore Bulker ship at Tanjung Priok Port in North Jakarta on Wednesday (14/2/2018). The imported rice is brought to the Bulog Jakarta-Banten Storehouse in Kelapa Gading. As much as 281,000 tons of imported rice has arrived at some ports across the country.

The government has decided to import rice, sugar, salt, beef and even buffalo, although it has repeatedly said that it wants to achieve self-sufficiency.

The reason to import rice is part of the government efforts to maintain the country’s rice reserves both held by the government and the State Logistics Agency (Bulog), while the plan to import sugar is part of a trade barter agreement in Indonesia’s palm oil exports to India. Salt is imported to cope with a production shortage of industrial salt.

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Imports and exports are common practices in trade globalization. Indonesia has been trading with foreign countries since the age of the Sriwijaya and Majapahit kingdoms. In the colonial era, the country always had a surplus of plantation crops. We were once the biggest sugar exporter in the world. Indonesia is also a member of the World Trade Organization (WTO). Importing is a consequence of our export practices.

In conducting export and import activities, Indonesia is required to have a strategy, policies and programs. The international trade strategy should be established in such a way that trade will bring benefits, especially for producers and exporters. A trade surplus is very important to strengthen and stabilize the rupiah exchange rate, boost the economy and improve the people’s welfare.

The foreign exchange from exports must be used to strengthen the country\'s financial system and not be “parked” in foreign banks.

These benefits can be seen in the trade balance. The foreign exchange proceeds from exports must be greater than the cost of imports. The foreign exchange from exports must be used to strengthen the country\'s financial system and not be “parked” in foreign banks.

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To get a trade surplus, we must be able to have a comparative advantage. This advantage can come from something that has been given, such as our rich natural resources. Apart from that, the exported products must have added value.

KOMPAS/IQBAL BASYARI

Dozens of East Javanese people demonstrate in front of the East Java Governor\'s Office in Surabaya on Tuesday, Jan. 23, 2018. They expressed their opposition to the rice import policy when the harvest period was approaching as they considered it to be detrimental to farmers.

In trade, we should choose countries that can produce goods we need. We also must also have sales promotions and protection strategies as well.

On rice, for example, we have import quotas and duties as high as those allowed by the WTO in order to protect our farmers. Rice is an important staple food. Do not let imported rice discourage farmers from planting their crop. National food security and sovereignty can be under threat. Moreover, the population continues to increase and there is also a climate change. Fertile land is increasingly scarce as well.

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We still suffer a shortage of sugar and salt production for the domestic industry. With the option of importing, it would be good if we could direct the use of imported industrial sugar and salt for export-oriented processed products such as food and beverages in order to gain a trade surplus.

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In essence, we need to audit the production, consumption and demand for commodities that have to be imported. The audits must be carried our regularly every year and must be transparent. The implementation of trade policies and strategies should be closely monitored and evaluated. The results of the audits should be used to establish a trading strategy that can help Indonesia gain a trade surplus.

(This article was translated by Hendarsyah Tarmizi).