Trade liberalisation has never been a popular policy in Indonesia despite its economic advantages. In contrast, protectionist policies are often believed as a good way to achieve the country’s national priorities. Take for example one of the Indonesia’s priorities to be self-sufficient in food. Import ban is seen by many Indonesians as a good policy to assist farmers. It might be partially true. However, according to Professor Peter Warr of the Australian National University, such a ban will reduce the availability of imported rice and therefore increase the domestic price. Who’s the most affected? Professor Warr suggests “the households for which rice is the highest proportion of their budgets – the poorest consumers. This includes not only the urban poor but also most of the rural poor, a surprising majority of whom are net buyers of rice.” In such a case, policy instruments should have been better targeted to assist the poor (Raskin or ‘rice for the poor’ might be more effective to directly impact on the poor) than a blunt trade instrument in addition to improved productivity.
How about trade in services?