Hadi Soesastro

The Political Economy of Trade Policy in Indonesia

In 1997, Indonesia was hit by an economic crisis. It forced the government to turn to the IMF and to adopt an economic recovery and reform programme, including in trade. This paper focuses on Indonesias trade policies after the economic crisis. The paper examines the policy trends towards protection and addresses the issues of competitiveness. It also discusses Indonesias positions in the WTO and Doha Round, and analyses its policies on and involvement in free trade agreements (FTAs), which have recently proliferated in the Asia-Pacific region. The paper concludes that FTAs have become an element of Indonesias international economic diplomacy. However, Indonesia will negotiate FTAs only with a few major trading partners, and the policy is aimed at producing high quality agreements.

ASEAN and APEC: Do concentric circles work?

Abstract This essay argues that cooperation in a sub‐regional setting such as ASEAN, involving six countries in Southeast Asia, can strengthen cooperation in the wider region, such as APEC. This argument lends support to ASEANs strategy of concentric circles of cooperation in which cooperation within the smaller grouping strengthens the groups participation within a larger grouping. The ASEAN Free Trade Area (AFTA), for example, is seen as providing a training ground for the ASEAN countries in their multilateral trade liberalization. However, APEC trade liberalization appears to be moving faster and will be broader in its coverage than AFTA. Nonetheless, it is possible that cooperation in the wider regional setting, such as APEC, could stimulate and strengthen ASEAN cooperation. This mutuality of influences between the smaller and the larger groupings creates the dynamics of the strategy of concentric circles of cooperation.

Indonesia's Crisis: Implications for the Region

What began as a currency crisis in Indonesia in the third quarter of 1997 rapidly turned into a deep financial crisis with wide-ranging economic and social impacts, and finally became a serious political crisis that exploded in May 1998, forcing President Soeharto to resign. Soeharto?s departure, however, did not resolve the crisis. He left behind an economy in shambles, a serious political vacuum and a highly polarised society. The issues to be dealt with are wide-ranging, including the loss of Indonesias position in the international system, the domination of industry by foreign capital and the imposition by the IMF of a certain model of economic development. Regional and international aspects of the crisis have not become an issue in the public debate and policy discourse in Indonesia. This article looks at these implications.