KATADATA - After a long consideration, President Joko Widodo finally declares that Indonesia is ready to join the Trans-Pacific Partnership (TPP). Indonesia’s commitment to join the free trade partnership in Pacific region was being delivered by Jokowi to the President of the United States (US), Barack Obama, during his visit to the White House in Washington DC, Monday noon local time, or Tuesday at dawn (27/10) in Indonesia.
Jokowi revealed that Indonesia has two considerations before deciding to join the TPP. First, Indonesia’s economy is an open one. Second, with population of 250 million, Indonesia is a country with the largest economy in Southeast Asia. “Indonesia is to join with the Trans-Pacific Partnership,” Jokowi said in the press conference with Barack Obama, as quoted in the official website of the Cabinet Secretary, Tuesday (27/10).
Indonesia’s decision to join TPP has become international news. New York Times and The Guardian mentioned this as “President Obama’s victory in partnering with an important ally in the Pacific area to balance the economic competition with China”. The reason for such news is because Indonesia has an economy worth US$ 1 trillion, is included in the G-20 group (world’s major economy countries).
TPP is one of the important element from the state visit agenda from President Obama’s foreign policy to build the largest economic and trades partnerships in the Pacific region. America, along with other 11 countries in the region, which are: Brunei, Chile, New Zealand, Singapore, Australia, Canada, Japan, Malaysia, Mexico, Peru, and Vietnam. These countries have signed the TPP ratification tract this early October.
All this time, Indonesia, which was under President Susilo Bambang Yudhoyono (SBY) and is under President Jokowi, tends to be reluctant in joining TPP. When the President attended the high-level conference of Asia Pacific Economic Cooperation (APEC) leaders in Beijing, China, mid November last year, Jokowi emphasized that Indonesia does not wish to just be a market that pulls only for the importance of big countries economy, like the US and China. So, Indonesia, back then, was still reluctant to join TPP or the Free Trade Area Asia Pacific (FTAAP), at least not until the economic integration of them both give real benefit for Indonesia.
“I think we still don’t want to get into there, we need to re-calculate the products that can be put into the market in the economic integration, which one that will benefit the people,” Jokowi said, as quoted by Antara.
But lately, Jokowi’s attitude started to change. Several days before visiting America, Jokowi said that he would give respond about the TPP after meeting with Obama. Clearly, the government has deregulated several trading rules that are protectionist in nature and complicated for foreign investors. “I know what they [investors] want. Indonesia is open to investment,” Jokowi said.
And besides the fact to pull the importance of US-China, Indonesia also has the importance to be a part in a wider economic and trading partnership so that the government can boost the export amid the slow global economy and plunging absorption from the oil and gas sector.
Trade Minister Thomas Trikasih Lembong (Tom) had indirectly reviewed about the TPP benefit for its members. He saw Vietnam as a great threat to Indonesia because the other Southeast Asia country has quickly moved to have an international trading agreement with the European Union and TPP. And so, Vietnam is easier to have access to US and other ten TPP members markets.
“Our greatest threat is Vietnam. We have fallen so far behind and I can tell that the President [Jokowi] is aware of this and very concerned,” Tom said.
And because of that, Jokowi urges so that Indonesia can immediately have the partnership with many nations. “In the cabinet meeting, the President has questioned me: Mr. Tom, when do we head to have a trade agreement with the European Union and America?” Thomas said, quoting Jokowi’s question.
Tom admitted that the government would focus on pursuing to ink an agreement in Free Trade Agreement (FTA) with the European Union and then TPP, since the majority of the terms and condition in TPP is the same with the FTA in European Union. “So 80 to 85 percent FTA European Union terms and condition is also in TPP,” Tom said. Furthermore, Foreign Affairs Minister Retno P. Marsudi said that the government has not determined any attitude towards TPP because they still want to see the details of the agreement. “We want to see the documents first,” Retno said.
And for further information, 12 countries have inked an agreement with TPP in Atlanta, United States, on October 5, after going through 19 negotiation processes in the last eight years. The 12 countries in TPP have gross domestic product (GDP) to stand at 40 percent from the total global GDP.
And based on a number of perspectives, the benefit of joining TPP for the members is a low tariff so that there is an increase of potential in export sector. But, the consequence is that protectionism practice is to be removed and there will be no privilege for the state-owned enterprises.