Yudhoyono to Joko: Don’t Force Indonesia to Enter TPP

Jakarta Globe, Hayat Indriyatno, October 31, 2015

Yudhoyono, whose foreign policy mantra was 'A thousand friends, zero enemies,'
has cautioned Joko to look at the geopolitical consequences of signing up to the
 TPP, which conspicuously leaves out China but includes US ally Japan.
(Antara Photo/Prasetyo Utomo)

Jakarta. Former president Susilo Bambang Yudhoyono has cautioned his successor against signing up to the Trans-Pacific Partnership, insisting the justifications he gave for refusing to join the trade pact while in office are still valid today.

In a series of tweets sent on Friday, Yudhoyono said President Joko Widodo had every right to commit Indonesia to the US-initiated pact, but warned that “If Indonesia is not ready and is forced to enter the TPP, then our nation will suffer. Such is the ‘law of globalization.’”

The essence of the TPP, he wrote, “is trade and investment liberalization.”

“The TPP is actually a good thing, if all the member states are ready, their interests are accommodated and there are real benefits all parties,” he said.

“But if we’re not ready for it, our market will be flooded with goods and services from other countries, while our exports will fail to be competitive abroad.”

Yudhoyono said his reasons for refusing to sign up to the TPP when he was in office included the fact that Indonesia was preparing for a similar agreement on a Southeast Asian scale: the Asean Economic Community, which comes into force at the end of this year.

He added that Indonesia also needed time to see the benefits from another trade pact, the Asean-China Free Trade Agreement, which saw Jakarta’s trade deficit with China doubling within a year of coming into full force in 2010.

Yudhoyono also pointed out that the three other Asean countries that had signed up to the TPP – Malaysia, Singapore and Vietnam – had fundamentally different economic models from Indonesia. “The economies of Singapore, Malaysia and Vietnam […] are ‘export-oriented.’ Indonesia is not. We have a large domestic market,” he tweeted.

He said that in order to protect its interests, Indonesia would have to be “tough” in its negotiations – but that the current TPP members had concluded their negotiations on Oct. 5.

Yudhoyono, whose foreign policy mantra was “A thousand friends, zero enemies,” also cautioned Joko to look at the geopolitical consequences of signing up to the TPP, which conspicuously leaves out China but includes US ally Japan.

“Let us ensure that we remain friendly with all our partners, including America, China and Japan,” he wrote. “Let us maintain a free and active foreign policy […] an all-directions foreign policy. Avoid allying with one country and distancing others.

“Let us also ensure that, whichever side we partner with, Indonesia’s national interests will be prioritized above all else.”

He then called on the Indonesian people to help Joko reach an “appropriate and clear decision for the interests of the people and the nation.”

Pastikan Indonesia mendapatkan keuntungan nyata ~ dlm pertumbuhan ekonomi, lapangan kerja & pengurangan kemiskinan. *SBY*

— S. B. Yudhoyono (@SBYudhoyono) October 30, 2015

Joko’s announcement, following a visit to the White House on Monday, that he was committed to signing Indonesia to the TPP has met with concern from the business community and the political establishment alike.

Yudhoyono’s own statements follow his Democratic Party’s warning that Indonesia is not yet ready to face the competition that joining the pact would entail, citing inadequate infrastructure and low public awareness about the TPP and its costs and benefits.

“Are Indonesians and the national economy really ready for this?” asked Edhie Baskoro Yudhoyono, the former president’s son and a senior member of the Democratic Party.

“How about our domestic infrastructure? Has the government asked for the public’s opinion, especially those involved in the national economy, about the possible impact of the TPP on Indonesia in the future?”

Wrong step

The Great Indonesia Movement Party (Gerindra), chaired by Joko’s rival in last year’s presidential election, Prabowo Subianto, has also criticized the president’s stance on the TPP.

Fadli Zon, a Gerindra deputy chairman and deputy speaker of the House of Representatives, said the TPP would only benefit Indonesia “if we had competitive businesses.”

Without adequate infrastructure and strong supporting education, welfare and legal systems, he warned, Indonesia would only be a “passive player” in the trade agreement.

“It would be a wrong step to join the TPP,” Fadli said on Wednesday.

Economist Lana Soelistianingsih of the University of Indonesia said separately that “Countries with manufacturing-based exports will be able to perform better in this partnership.”

“Our exports are mainly raw materials like oil and gas. If we can we get our commodities into a market like Chile” – which has signed up to the TPP – “can we compete with Brazil, which is much closer to Chile than Indonesia is? That’s the concern,” Lana said on Wednesday.

“How can we improve our manufacturing sector without electricity? It’s not that we should refrain from entering the partnership, but we need a clear blueprint on what products we want to sell, which raw materials we need to manufacture the products, and what kind of infrastructure we need,” she said.

The TPP, forged by the United States and other 11 countries around the Pacific Rim, including Australia and Canada, has a stated goal to “to promote economic growth; support the creation and retention of jobs; enhance innovation, productivity and competitiveness; raise living standards; reduce poverty in our countries; and promote transparency, good governance, and enhanced labor and environmental protections.”

In practice, the biggest impact will be the lowering of trade barriers, including tariffs.

The #TPP - a 12-nation free trade agreement pic.twitter.com/1h82wFRF68

— Agence France-Presse (@AFP) November 5, 2015

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