ib tutorial 4

8/14/2019 IB Tutorial 4

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Making Trade Policy in aMaking Trade Policy in a

New Democracy after aNew Democracy after aDeep Crisis: IndonesiaDeep Crisis: Indonesia


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OverviewOverview IntroductionIntroduction

ObjectiveObjective

Research MethodologyResearch Methodology

Key FindingsKey Findings

ConclusionConclusion


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OverviewOverview

An alternative view was observed from countries in crisisAn alternative view was observed from countries in crisis

over the past 2 decades.over the past 2 decades.

Economies do not turn inwards which are expected underEconomies do not turn inwards which are expected under

the conventional historical view.the conventional historical view.

The paper discusses scenario of Indonesia which reflectsThe paper discusses scenario of Indonesia which reflects

the above and also the relationship between politicalthe above and also the relationship between political

environment and trade policies.environment and trade policies.


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IntroductionIntroduction

HOW do deep economic crises affect trade policy in developingHOW do deep economic crises affect trade policy in developingcountries?countries?

It is argued that governments find it easier to reform during good times,It is argued that governments find it easier to reform during good times,of strong economic growth and low unemployment.of strong economic growth and low unemployment.

However, based on the observed behaviour of countries in crisis.However, based on the observed behaviour of countries in crisis.

In 1993, emergence of the term the new liberalisation.In 1993, emergence of the term the new liberalisation.

In 1996, this argument was developed more generally with crisisIn 1996, this argument was developed more generally with crisishypothesis.hypothesis.

IndonesiaIndonesia

Late 1960s and mid-1980s: Rapid economic growth & Liberalisation.Late 1960s and mid-1980s: Rapid economic growth & Liberalisation. 1997 1998: Economic and Political crisis1997 1998: Economic and Political crisis

Economic: Contracted by over 13 per cent & Government sign on toEconomic: Contracted by over 13 per cent & Government sign on toIMF programme.IMF programme.

Political: Rule of President Soeharto came to an abrupt end.Political: Rule of President Soeharto came to an abrupt end.


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ObjectiveObjective

to prove and explain the little e al. (1993) view "newto prove and explain the little e al. (1993) view "new

liberalization" and the Lal and Myint (1996) "crisisliberalization" and the Lal and Myint (1996) "crisis

hypothesis", using Indonesia's economic and politicalhypothesis", using Indonesia's economic and political

situation from the late 1960s until now as an example.situation from the late 1960s until now as an example.


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Topics of the Journal (Researched Topics)Top

ics of the Journal (Researched Topics)

Background on The Indonesian ContextBackground on The Indonesian Context

Reviews on Evolution of Trade Policy of IndonesiaReviews on Evolution of Trade Policy of Indonesia

Reviews on Economic Crisis 1997-1998Reviews on Economic Crisis 1997-1998 Reviews on New Post-Crisis Policy-making FrameworkReviews on New Post-Crisis Policy-making Framework

Examinations on International Trade Policy since CrisisExaminations on International Trade Policy since Crisis

Examinations on Changing Domestic Trade Policy RegimeExaminations on Changing Domestic Trade Policy Regime

Analysis of Bureaucracys Attempt to develop a New TradeAnalysis of Bureaucracys Attempt to develop a New TradePolicy LawPolicy Law


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Basis of ContentsBasis of Contents

This journal was compiled by 3 persons from differentThis journal was compiled by 3 persons from differentinstitutions Asian Development Bank, Australian Nationalinstitutions Asian Development Bank, Australian NationalUniversity and Centre for International Economics.University and Centre for International Economics.

All findings and analytical results were backed by dataAll findings and analytical results were backed by dataderived from the comparisons of past and present tradederived from the comparisons of past and present tradepolicies, economical standing and political stability.policies, economical standing and political stability.

References for the data gathered to conclude on the topicsReferences for the data gathered to conclude on the topicswere mainly from Economic Journals, Governmentwere mainly from Economic Journals, GovernmentDatabases, Researched Writings.Databases, Researched Writings.



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Before the Economic CrisisBefore the Economic Crisis

Disengaged from global trade and investment.Disengaged from global trade and investment.

Withdrawn from the United Nations, IMF and the World Bank.Withdrawn from the United Nations, IMF and the World Bank.

Nationalist Resurgence, Tariffs were increased (close to 20 percent).Nationalist Resurgence, Tariffs were increased (close to 20 percent).

Low Protection on many sector.Low Protection on many sector.

During the Economic CrisisDuring the Economic Crisis

Contraction over 13 Percent, Sharp Depreciation of the rupiah.Contraction over 13 Percent, Sharp Depreciation of the rupiah.

Rp 2500 to Rp 17,500Rp 2500 to Rp 17,500 InflationInflation


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After the Economic CrisisAfter the Economic Crisis

Tariff harmonization (Uniform Tariff Rate)Tariff harmonization (Uniform Tariff Rate)

Lowering average tariff rate, reducing the number of tariffLowering average tariff rate, reducing the number of tariff

bands.bands. By 2010, most tariff should be between 5 to 10 percent.By 2010, most tariff should be between 5 to 10 percent.

Agriculture goods remains high in tariff.Agriculture goods remains high in tariff.

Non-Agriculture goods to have lower tariff.Non-Agriculture goods to have lower tariff.


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ConclusionConclusion

Indonesia remained a largely open economy despite theIndonesia remained a largely open economy despite theeconomic crisis and highly unpopular IMF program.economic crisis and highly unpopular IMF program.

Effectiveness of the government does not strongly enforceEffectiveness of the government does not strongly enforcethe above.the above.

No clear policy making structure (on Tariffs).No clear policy making structure (on Tariffs).

To maintain reform momentum, Indonesia establishedTo maintain reform momentum, Indonesia establishedindependent central bank, legislated rules governing fiscalindependent central bank, legislated rules governing fiscaldeficits and public debt and establishment of export zones.deficits and public debt and establishment of export zones.


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Thank youThank you

Aloysius, TanAloysius, Tan

Josephine, TanJosephine, TanLewis, TanLewis, Tan

Sheow Wei, TanSheow Wei, Tan

Wan Teng, TanWan Teng, Tan

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