Indonesia's own version of a China containment policy, which takes the
form of nationalistic and protectionist regulations, has hurt the country's
long standing trading partner, Japan - a situation that could easily turn for
the worse if government officials fail to exercise good diplomacy, experts
said.
The spat between Indonesian and
Japanese officials intensified recently when the former sent a letter to the
Energy and Mineral Resources Ministry threatening to terminate imports of paper
should Indonesia insist on taxing metal ore exports.
Japan, the world's second-largest
nickel consumer, previously threatened to file a complaint with the World Trade
Organisation (WTO) in response to new changes in Indonesia's mineral trade
policy.
Newly appointed Indonesian Energy
and Mineral Resources Deputy Minister Rudi Rubiandini responded to the threat
saying that the country could easily terminate its supply of liquefied-natural
gas (LNG) to Japan. Japan is Indonesia's largest LNG buyer, purchasing 172 out
of 362 cargoes exported last year.
Djisman Simandjuntak, the
chairman of the Board of Management of the Centre for Strategic International
Studies (CSIS) and also the executive director of Prasetiya Mulya Business
School, said worsening relations with Japan was a result of a shift in
Indonesia's trade policies, which he said had taken a more "protective and
nationalistic" path compared to 25 years ago.
He suspected the policies were
motivated by concerns over the free trade agreement with China.
"Many Indonesian producers
have changed their strategies, from manufacturing to distributing goods because
they cannot compete with cheap and mass-made products from China. Maybe this
fact ignited the new sense of nationalism," he said.
The Indonesian government issued
a set of regulations on May 6 that imposes tougher requirements on the export
of 65 types of raw minerals, including metal ores, and introduces a 20 per cent
export tax.
The regulation is deemed
necessary to secure and curb the over-exploitation of resources ahead of the
full implementation of a ban on raw mineral exports in 2014. Similarly,
protectionist policies were introduced earlier: the ban on raw rattan exports,
the limitation of import gateways for horticulture produce and the limitation
of product categories for importers.
"Indonesian and Japanese
officials have to really know the limits to be able to prevent things from escalating.
These frictions must not affect other fields. What is at stake is a very
important building block of our external economic relations," he said.
Indonesian Institute of Sciences
(LIPI) economist Thee Kian Wie also acknowledged that Indonesia had lately
opted for a more nationalistic approach in terms of policies. He said this was
legitimate as long as the policies were based on rational economic
calculations.
"Japan is an important
country to Indonesia. It exports capital-intensive goods, machines and other
mechanical components. It is also a potential market for our products," he
said.
Between January and April 2012,
total trade between the two countries reached US$18.45 billion, up 12.55 per
cent from a year earlier. Indonesia exported $10.7 billion of commodities and
goods to Japan, while its imports stood at $7.75 billion between January and
April this year.
Indonesian Foreign Ministry
director for East Asia and the Pacific Dewi Savitri Wahab said conflict was
common in international relations and Indonesia-Japan relations were no
exception to that.
"Every country has its own
policies, including Indonesia and Japan. We try our best to explain our
policies and so far our Japanese counterparts have accepted the explanation. We
are mature enough to address our problems," she said.
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