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FOREIGN TRADE BARRIERS 1999
INDONESIA
In 1998, the U.S.
trade deficit with Indonesia was approximately $7.0
billion, an increase of $2.4 billion from the U.S. trade
deficit of $4.7 billion in 1997. U.S. merchandise exports
to Indonesia were approximately $2.3 billion, a decrease
of $2.2 billion (49.5 percent) from the level of U.S.
exports to Indonesia in 1997. Indonesia was the United
States’ 40th largest export market in 1998. U.S.
imports from Indonesia were $9.3 billion in 1998, an
increase of $147 million (1.6 percent) from the level of
imports in 1997. The stock of U.S. foreign direct
investment (FDI) in Indonesia in 1997 was about $7.4
billion, a decrease of 1.7 percent from the level of U.S.
FDI in 1995. U.S. FDI in Indonesia is concentrated
largely in the petroleum, manufacturing and financial
sectors.
Overview
Indonesia
continued to endure in 1998 a period of economic turmoil
that commenced in July 1997 as Asian currencies,
including the rupiah, began to depreciate. In response to
deteriorating macroeconomic conditions, the Government of
Indonesia (GOI) has been working with the International
Monetary Fund (IMF) on an economic reform program since
October 1997. This stabilization package has been
modified several times, most significantly in January
1998 and again in June 1998 following the resignation of
President Soeharto. The latter versions of the program
expanded the focus of earlier programs to cover the
entire range of economic challenges facing Indonesia.
These include fiscal policy, monetary policy, structural
reform and deregulation, corporate debt and bankruptcy
proceedings, banking sector reform and restructuring,
restoration of trade financing to promote exports, food
security, the distribution system and social safety net
policies. The program provides for unprecedented and
accelerated structural reforms in virtually every sector
of the economy and major changes in the trade regime.
Despite the sharp
economic downturn in Indonesia, the Indonesian Government
has undertaken structural reforms to dismantle the
national car and aircraft programs, reduce tariffs on
agricultural commodities and industrial goods, eliminate
export taxes, and disband marketing monopolies. Indonesia
appears to be implementing its border liberalization and
internal market reforms captured in the IMF memoranda
from October 1997 to date, although careful monitoring is
warranted given the ambitious scope of liberalization
involved and the relatively low level of commercial
activity in 1998. Although implementation has been slow
in several areas and serious problems remain with the
banking system and outstanding corporate debt, the
changes being implemented are substantial improvements in
the operating environment for businesses in Indonesia.
The major,
recently articulated concerns of U.S. industry include:
high tariffs and taxes; unpredictable issuance of
regulations and licenses; issuance of new regulations
without implementation procedures, causing arbitrary
interpretations; lack of intellectual property
protection; widespread corruption; a court system unable
to enforce legal contracts; an underdeveloped legal
system that makes negotiation of credit facility
documents difficult; laws that only provide for
guarantees and not security interest; non-existent credit
reporting; and underdeveloped capital markets.
Import
Policies
Standards,
Testing, Labeling and Certification
Government Procurement
Export
Subsidies
Lack
of Intellectual Property Rights
Services
Barriers
Investment
Barriers
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