Trade, investment and industry policies will be aligned in order to achieve such goals.
By
Kompas Editor
·3 minutes read
Indonesia needs a “big push strategy” in order to ensure trade, especially exports, are able to support its post-pandemic economic recovery.
Kompas Daily reported on Friday (22/10/2021) that the government had promised to work extra hard to promote the country’s competitiveness. Trade Minister Muhammad Lutfi said a number of efforts would be made to improve competitiveness such as through the diversification of the market and products and by becoming a part of the global supply chains. Trade, investment and industry policies will be aligned in order to achieve such goals.
The pandemic is changing the world order, including trade. However, the World Trade Organization (WTO) noted the Group of Twenty (G-20) major economies and other countries in general still supported free trade agreements. This provides an opportunity for Indonesia to increase its trade, especially exports.
The trade minister’s statement signaled the need for a grand strategy to promote our trade. Such a strategy is needed make our products more competitive by producing goods and services more efficiently.
Our natural resources such as crude palm oil and coal are among the largest contributors to our exports.
Every country exports their primary goods and services, and Indonesia has a comparative advantage in natural resources. Our natural resources such as crude palm oil and coal are among the largest contributors to our exports.
To be sustainable, our export products must be able to enter the global supply chain. However, we must choose to enter the supply chain with products with the highest added value. That is why President Joko “Jokowi” Widodo continues to encourage the downstreaming of our natural resource-based products.
Our comparative advantage must be turned into a competitive advantage such as by developing product specialization.
Indonesia, with its large and diverse natural resources, can specialize in processing agricultural products in a broad sense, as well as minerals and coal, by using advanced technology. The development of the natural resources-based processing industry will be able to create quality jobs for millions of people, especially if it is carried out through the integration of upstream and downstream industries involving small and medium enterprises (SMEs).
Therefore, we must also develop domestic trade as a major driver of our exports. This domestic trade could help grow the economies of natural resource-producing areas. In each trade chain, there must be an improvement in efficiency and productivity so we will be able to produce the products according to the requirement and are also able to deliver them on time. The local industries should, therefore, be able to produce products according to international trade standards and compete in the export market.
Trade strategies and policies also need to ensure that all export earnings can be taken back into the country through national banks so that they can be used to support the national economy. In the end, the strength of our economy can be measured by the value of our exports.
(This article was translated byHendarsyah Tarmizi).