Joko Goes Protectionist by Saying Domestic Market Not to Be Dominated by Foreigners

Jakarta Governor Joko Widodo speaks first at the second presidential debate. (JG screen grab)

[Updated at 12:09 a.m. on Monday, June 16, 2014]

Jakarta. Presidential candidate Joko Widodo showed his protectionist and nationalist streak when he responded to Prabowo Subianto’s question about how Indonesia should position itself when the Asean Economic Community is enacted in 2015.

“The government [Indonesian government] should strike first. Our domestic market should not be dominated by foreigners,” Joko said, adding that the government can help by setting up tougher regulation for foreign products to enter Indonesian market. “This is a fact we have to face next year.”

Joko then talked about discreetly discriminating foreigners when it comes to the issuing of business permits.

“As to matters related to permits, we will ease and process local investors quickly. Those from overseas, they can be hindered for a bit. I don’t have to give [explicit] instructions. We can have it this way,” Joko said. “We are open, but covertly, we will build up our regulations.”

Although Joko believes Indonesia’s economy is performing well and Indonesia’s entrepreneurs have managed to make breakthroughs to penetrate overseas markets, efforts to push for protectionism is required.

“[There should be] regulations that create barriers so they will not be that easily come into our [market],” Jokowi said.

With regards to Prabowo’s questioning as to whether Indonesia should review the contracts with foreign investors that may put the nation at a disadvantage, Jokowi said: “We have to respect all the contracts signed. It cannot be just all of the sudden we change it,” he said.

Joko highlighted that respecting existing contracts is important to maintain good confidence to invest in Indonesia.

“But when all of those contracts expire, indeed we have to calculate. Whether we will take it [the assets] or not, either it is through the SOEs or other means. But I want to emphasize that just like our constitution says, our natural resources, is supposed to be used for the general welfare of the people.”

Aldian Taloputra, an economist at Mandiri Sekuritas, said that there were some ambiguities in Joko’s response.

“For foreign investment, it’s a very sensitive topic,” he said. “I think we still have to see the reality that several countries do the same thing [making it more difficult for foreigners to invest into their country]. But Jokowi was not being clear on what kind of barrier he would bring upon if that were to happen. It was a good question to see what the candidates’ stance on foreigners are during the Asean Economic Community.”

“Meanwhile, Prabowo did not voice out his stance on that one, by the way. So I think that question should’ve also been asked to him,” Aldian said. “And I think, maybe what Jokowi was trying to say was that the country should become more prudent in welcoming foreigners into the country.”By Josua Gantan, Muhamad Al Azhari & Basten Gokkon on 09:54 pm Jun 15, 2014