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Indonesia, a nation of 250 million people and rising middle incomes, has tremendous potential to compete in world markets, and attract growth-enhancing investment and trade. Smartly tailored regulatory settings are key to promoting private sector development, job creation and economic growth. To address this, AIPEG supports the government to promote a range of microeconomic reforms to boost productivity across the Indonesian economy.

AIPEG pursues an integrated approach to boost competitiveness, trade opportunities, and reduce cost of doing business:

  • Efficient markets: Increasing use of competition policy and supporting reform in targeted sectors to boost competitiveness.
  • Doing business: Reducing barriers and costs to opening, running and closing a business.
  • Global value chains: Reducing barriers to trade and investment to increase Indonesia’s participation in global value chains.
Boosting trade

Trade barriers increase costs to Indonesian consumers and producers, and reduce economic growth. In Indonesia, non-tariff trade measures (e.g. quotas, complicated licences and pre-shipment inspection rules), almost doubled between 2009 to 2015. When the Indonesian government announced its first economic policy package in September 2015 aimed at improving the business climate, AIPEG was well placed to support. AIPEG’s prior work with the Ministry of Trade in reviewing the trade licensing regime meant that the evidence-base was established to immediately deliver two reforms:

  • Making compliance with Bahasa Indonesia labelling requirements easier: labels may be stamped or inserted into packages, rather than embossed, printed or glued onto the product before reaching Indonesia.
  • Simpler screening requirements for imported shipments to ensure compliance with National Standards. A post-shipment audit process can now be undertaken rather than screening at ports for some imports.

These reforms are aimed at striking the right balance between consumer protection and reducing business costs for greater growth and job creation.