Indonesia mulls 'use local' decree, denies protectionism

Indonesia plans to order its nearly four million civil servants to use local products ranging from footwear to heavy machinery, officials said

Indonesia mulls 'use local' decree, denies protectionism

Indonesia plans to order its nearly four million civil servants to use local products ranging from footwear to heavy machinery to help the economy weather the global financial crisis, officials said on Monday.

Officials denied the measures would be protectionist, although the government has come under pressure in an election year to shield domestic industries and limit unemployment. "Given the current crisis that has affected the nation's economy, we hope we can use products from domestic companies to avoid lower productive capacity," said Fauzi Aziz, director general of small and medium enterprises at the industry ministry.

He said that ministers in the administration of President Susilo Bambang Yudhoyono were drafting a decree to order civil servants and schools funded by state and regional budgets to use products from Indonesia.

Aziz denied that the policy amounted to protectionism.

"It's as if we were sick and we were seeking treatment from the best doctor in the country. This treatment is the best, so why not?" Aziz said. He did not say how the regulation would be enforced.

Officials said ministers were still discussing the decree that was due to be released by March at the latest.

Trade Minister Mari Pangestu said in an interview with Reuters in December that policies to tackle imports and drive domestic demand were not protectionist, but necessary to curb smuggling, meet safety rules and spur growth.

With parliamentary elections due in April and presidential elections in July, there have been calls from some politicians for a more protectionist stance to shield the economy.

Aziz said the new policy would help sectors such as textiles, food and beverages, children's toys and electronics.

Another official at the industry ministry, Agus Tjahajana, said the new regulation would also extend to purchases of government and school uniforms, shoes for the military and government vehicles.

Indonesia, Southeast Asia's biggest economy, has experienced a slump in exports of key commodities such as tin and palm oil due to the global economic crisis.

Reuters

Last Mod: 16 Şubat 2009, 17:07
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