JAKARTA (TheInsiderStories) – Indonesia’ President Joko Widodo signed a Presidential Decree Number 24 Year 2018 concerning the National Team for Increasing the Use of Domestic Production. The policy is part the government plant to reduce import costs.
The existence of this team carries out the provisions of Article 73 paragraph 2 of Government Regulation Number 29 of 2018 concerning Industrial Empowerment, on Sept. 17, 2018.
“This Presidential Decree comes into force on the date stipulated,” read Article 8 of Presidential Decree Number 24 of 2018, which was shown at the page of the Cabinet Secretariat on Thursday (20/09).
The composition of the membership of the National Team consists of the Chair is the Coordinating Minister for Maritime Affairs, the deputy is the Coordinating Minister for Economic Affairs and the daily chairperson, namely the Minister of Industry.
As for members of the team all the economic ministers, the Minister of Education and Culture, Minister of Research and High Education, Attorney General, Cabinet Secretary also Indonesian Chamber of Commerce and Industry and other government institutions.
It said, the national team must reports the implementation of their duties to the President at least 1 time in 6 months or at any time needed.
According to this Presidential Decree, the National Team has the duty to monitor domestic production since the planning stage in the procurement of goods and services carried out by state institutions, ministries, non-ministerial government agencies, other government institutions, regional apparatus units, state-owned enterprises (SOEs), regional state enterprises (RSE), and private business in accordance with Article 57 of the regulation.
Then, coordinate and evaluate the implementation of the duties of the Domestic Product Improvement Team in state institutions, ministries, non-ministerial government institutions, other government institutions, regional government work units, SOEs, RSE, and private business entities;
As well as, promoting and socializing the use of domestic production, encouraging early education regarding love, pride, and hobby of using domestic production, as well as providing access to domestic production information.
Furthermore, supervising the implementation of the consistency of the value of the Domestic Component Level on goods and services products based on the certificate owned by the producer of the service in question
Finally, said the regulation, the team must coordinate the resolution of problems that arise related to the calculation of local use content values and the implementation of consistency of the values in accordance with certificates or documents owned by the producers of goods and services.
“In carrying out the tasks as intended, the National Team can involve industry Associations and professional organizations,” said Article 4 of the Presidential Decree.
The government had taken bold steps to address Indonesia’s persistent current account deficit (CAD), which continues to underwhelm the economy and a source of weakness and volatility for the rupiah.
Of all the four measures announced by Finance Minister Sri Mulyani Indrawati halted 1,147 imports products. Another important measure is the expansion of 20 percent biodiesel mix policy or B20 to non subsidized fuel starting in September.
The expanded B20 policy is estimated to cut imports by US$2.3 billion until the end of the year. In addition, given Indonesia’s position as the world’s largest CPO exporter, the policy will boost the price of the commodity.
Curbing import is the easiest route in the attempt to curb the widening CAD, which reached 3 percent of GDP in the second quarter. Indonesia recorded a trade deficit $1.02 billion in the first six months this year, with imports rising faster in the past two months as economic activities gain momentum.
The Statistics Indonesia will announced Indonesia’s July trade data at 1100 local time. The trade data may offer a glimpse on the impact of accelerating economy, depreciated rupiah, the trade war and, more importantly, whether the plan to halt imports is justified.
In addition, Indonesia’s balance of payment also saw its deficit widened to $4.3 billion in second quarter (2Q) of 2018 from $3.9 billion in 1Q 2018. That shows money are leaving Indonesia not only through trade in services but also from the financial and capital market. Typically, Indonesia records a current account deficit but still maintains a surplus in balance of payment.