RESTRICTEDWORLD  TRADE
ORGANIZATIONWT/TPR/S/51
5 November 1998
(98-4306)
Trade Policy Review Body
TRADE POLICY REVIEW
INDONESIA
Report by the Secretariat
This report, prepared for the Trade Policy Review of Indonesia, has been drawn
up by the WTO Secretariat on its own responsibility.  The Secretariat has, as
required by the Agreement establishing the Trade Policy Review Mechanism
(Annex 3 of the Marrakesh Agreement Establishing the World Trade
Organization), sought clarification from  the Government of Indonesia on its
trade policies and practices.
Document WT/TPR/G/51 contains the policy statement submitted by the
Government of Indonesia.
Note: This report is subject to restricted circulation and press embargo until the end of the meeting
of the Trade Policy Review Body on Indonesia.Indonesia WT/TPR/S/51
Page iii
CONTENTS
SUMMARY OBSERVATIONS   ix
(1) ECONOMIC ENVIRONMENT   ix(2) INSTITUTIONAL FRAMEWORK    x(3) TRADE POLICY BY MEASURE   xi
(i) Border measures   xi(ii) Internal measures  xii
(4) TRADE POLICY BY SECTOR xiii
(i) Agriculture xiii
(ii) Manufacturing xiii
(iii) Services xiv
(5) TRADE POLICIES AND FOREIGN TRADING PARTNERS xiv
I. ECONOMIC ENVIRONMENT    1
(1) INTRODUCTION    1(2) RECENT ECONOMIC DEVELOPMENTS    4
(i) Recent growth and employment trends    4
(ii) Macroeconomic policies    4
(iii) Structural and trade reforms  10
(3) TRADE AND INVESTMENT PERFORMANCE  11
(i) Trade patterns  11
(ii) Investment trends  15
(4) OUTLOOK  15Annex I.1 Indonesia – Memorandum on Economic and Financial Policies  17
II. INSTITUTIONAL ASPECTS OF INDONESIA'S TRADE POLICIES  27
(1) OVERVIEW  27(2) THE INSTITUTIONAL FRAMEWORK  27
(i) Changes in the general institutional framework  27
(ii) Economic and trade policy formulation  28(iii) Legal framework  30WT/TPR/S/51 Trade Policy Review
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(3) EXTERNAL POLICY-MAKING  31
(i) Multilateral agreements and arrangements  31
(ii) Regional agreements or arrangements  35
(iii) Participation in other fora  38
(4) INVESTMENT REGIME  39
(i) Recent performance and developments  39
(ii) International initiatives and agreements  44
III. TRADE POLICIES AND PRACTICES BY MEASURE  45
(1) OVERVIEW  45
(2) MEASURES DIRECTLY AFFECTING IMPORTS  46
(i) Customs procedures  47
(ii) Tariffs and other border levies  49
(iii) Non-tariff border measures  56
(3) MEASURES DIRECTLY AFFECTING EXPORTS  70
(i) Export restrictions and controls  70
(ii) Export and trade finance  77
(iii) Export-oriented zones, duty drawbacks and exemptions  79
(4) INTERNAL MEASURES  79
(i) Regulation, standards and other technical requirements  79
(ii) Tax measures  80
(iii) Subsidies  83(iv) Government procurement  85
(v) Price and distribution controls  87
(vi) Competition policy, deregulation and privatization  88
(vii) Strategic industries  91
(viii) Intellectual Property Rights  92
IV. TRADE POLICIES AND PRACTICES BY SECTOR  95
(1) OVERVIEW  95(2) AGRICULTURE AND FORESTRY  96
(i) Policy trends and reforms  96
(ii) Sectoral developments in agriculture 100
(iii) Forestry and logging 103
(3) PETROLEUM AND GAS 106Indonesia WT/TPR/S/51
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(4) MANUFACTURING 104
(i) Overview 104
(ii) Performance in export-oriented sectors 108
(iii) Recent developments in strategic industries 111
(5) SERVICES 115
(i) Overview 115
(ii) Financial services 115
(iii) Telecommunications services 121(iv) Air transport 127
(v) Tourism 128
REFERENCES 130
APPENDIX TABLES 131WT/TPR/S/51 Trade Policy Review
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CHARTS
I. ECONOMIC ENVIRONMENT
I.1 Main indicators of macroeconomic performance 1994-97     8
I.2 Merchandise trade by sector, 1994 and 1997   13
I.3 Direction of merchandise trade, 1994 and 1997   14
III. TRADE POLICIES AND PRACTICES BY MEASURE
III.1 Tariffs on agricultural products by HS chapter, 1998   52
III.2 Tariffs on manufactured products by HS chapter, 1998   53
III.3 Tariff escalation, 1998   54
IV. TRADE POLICIES AND PRACTICES BY SECTOR
IV.1 Production of motor vehicles in Indonesia, 1986-97 112
IV.2 Bad and doubtful debts at Indonesian banks and loan to deposit ratios,
as at June 1997 117
IV.3 Competitive situation in individual telecommunications markets, 1997 126Indonesia WT/TPR/S/51
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TABLES
I. ECONOMIC ENVIRONMENT
I.1 Basic economic and social indicators, 1993-97     2
I.2 Economic performance, 1993-97     3
I.3 Summary of government finances     5
I.4 Balance-of-payments, 1993-97   10
I.5 Approved foreign investment by sector, 1990-97   16
II. TRADE POLICIES AND PRACTICES BY SECTOR
II.1 Principal notifications made in the context of implementing
WTO Agreements, November 1997   33
II.2 Case involving Indonesia under WTO dispute settlement provisions, November 1997   34
II.3 Negative Investment List, July 1998   42
III. TRADE POLICIES AND PRACTICES BY MEASURE
III.1 Evolution of Indonesia's applied tariff structure in the period under review, 1994-98   50
III.2 Applied and bound tariff indicators, 1998   50
III.3 Products subject to import bans or prohibitions   57
III.4 Coverage of non-tariff measures, 1986-95   58
III.5 Products subject to licensing, May 1998   59
III.6 Anti-dumping measures, 24 April 1998   67III.7 Export bans, April 1998   72
III.8 Check-prices for levying export taxes   73
III.9 Export taxes   76
III.10 Regulated exports, April 1998   77
III.11 Supervised exports, April 1998   78III.12 Subsidy for petroleum products, 1995-98   85
III.13 Market structure in selected agriculture and manufacture sectors before
the IMF package   88
III.14 Acquisition and enforcement of intellectual property rights, June 1998   92
IV. TRADE POLICIES AND PRACTICES BY SECTOR
IV.1 Output of major agricultural productions, 1995-97   98
IV.2 Domestic and word prices of major commodities, before deregulation   98
IV.3 Indonesia's main iron and steel production, 1994-97 111
IV.4 Local-content and import duty rates under the 1993 Programme 113IV.5 Development of the domestic telecommunications network 122WT/TPR/S/51 Trade Policy Review
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APPENDIX TABLES
AI.1 Exports by groups of products, 1985-97 133
AI.2 Imports by groups of products, 1985-97 134
AI.3 Imports by origin, 1985-97 135
AI.4 Exports by destination, 1985-97 136AII.1 1998 CEPT Package 137
AII.2 Schedule of CEPT Tariff Reduction, 1997-2003 137
AIII.1 Indonesia tariffs by ISIC Rev.2 categories, 1998 138
AIII.2 Consolidated c oncessions granted by Indonesia to trading partners, May 1998 143
AIV.1 Summary of Indonesia's specific commitments under the GATS 144Indonesia WT/TPR/S/51
Page ix
SUMMARY OBSERVATIONS
1. The period under review (1994-98)
has been one of great contrast for Indonesia.
After three decades of continuous growth
fostered by political, social and
macro-economic stability, the Asian economic
crisis of 1997 has sown the seeds of major
change in Indonesia's economy and politicalsystem.  The crisis, and the subsequent fall in
GDP, the largest among ASEAN countries,
revealed underlying weaknesses in Indonesia's
economic and financial structures, which
prompted calls for reform.  Subsequently,Indonesia embraced a programme of measures
aimed at stabilizing the economy,
restructuring its ailing banking system, and
creating the conditions conducive to a more
efficient, market-based allocation of resourcesin several key sectors.
2. Trade and foreign direct investment
have been at the heart of Indonesia's economic
policy during the review period.  In 1994-96,
the pace of trade and investment reforms hadslowed somewhat, compared with previous
years, with liberalization proceeding in a
selective manner.  In the face of the recent
economic crisis, however, the Government
undertook to accelerate the pace of reforms
and to remove many remaining restrictions on
domestic and international trade.  Thesereforms involve, inter alia, a major review of
anti-competitive practices, including
monopolies, oligopolies and all other
restrictive marketing arrangements that had
survived Indonesia's trade liberalization in thelast decade.  This will contribute to a
"levelling of the playing field" across many
sectors, creating a more open, competitive
marketplace, where few firms will remain
protected.
(1) ECONOMIC ENVIRONMENT
3. In the period under review, the
Indonesian economy went from high growth to
deep recession.  From 1994 to 1996, real GDPgrew on average by 8% annually.  Although
economic activity started to decelerate in the
second half of 1996, the financial crisis of1997 transformed a soft landing of the
Indonesian economy into a serious recession.
In the first half of 1998, GDP shrank by 12%,
and is expected to fall by 10-15% for the year
as a whole.  In addition, inflation has climbed
from an average of 10% in the years of highgrowth to an expected rate of 80-100% at the
end of 1998, with the sharp devaluation of the
rupiah playing a role, particularly through
higher prices of imported food.  These have
also raised the cost of food subsidies and havecontributed to the budget moving from a small
surplus in the 1996/97 fiscal year to a
projected deficit of 8.5% of GDP in 1998/99.
4. Indonesia's international trade has
also been severely affected by the recession inthe country and elsewhere in Asia.  Imports,
which increased by nearly 27% in 1995,
declined by 3% in U.S. dollar value in 1997
before falling by 30% in the first quarter of
1998, under the combined effects of the drop
in domestic demand, the devaluation of the
rupiah and a decline in trade finance.Exports, a major element that could have
stimulated activity in current circumstances,
have fallen (in value terms) as a result of the
slump in demand elsewhere in Asia and the
marked decline in domestic production,generated in part by the lack of imported
inputs, with the trade finance factor and a
serious shortage of containers also playing
their role.
5. The causes of the financial and
currency turmoil are multiple and complex.
External factors, such as the withdrawal of
international investors from Asia in the wake
of the Thai, Philippines and Korean crises,
were compounded by internal developments,particularly growing uncertainty about
economic, social and political stability in
Indonesia.  The outcome was a major loss of
confidence in Indonesia's immediate
prospects.  Macroeconomic imbalances have
not been the source of market concern in the
case of Indonesia.  Instead, a late change ofperception about the soundness of the
financial system led to a dramatic
reassessment of the economic risk, and, as
economic conditions deteriorated, aWT/TPR/S/51 Trade Policy Review
Page x
re-evaluation of the political and social risks.
The reversal of market sentiment
corresponded to the excessive optimism
prevailing before the crisis, which led
investors, and possibly the international
community, to underestimate the risksassociated with economic activities in
Indonesia.  The significant devaluation of the
rupiah, while improving export
competitiveness helped slow imports, and may
have contributed to a rapid transmission of thecrisis to the real economy.  As a consequence
of these factors, Indonesia is into its worst
recession since 1963.
6. In response, the authorities decided on
the need for reform to restore confidence andset the conditions for stable sustainable
growth.  They have reiterated Indonesia's
commitment to stable macroeconomic policies,
started to restructure the banking sector and
addressed long-standing structural
impediments to growth, many of which had
been identified in the course of previous TradePolicy Reviews.  These impediments include
the many trade distorting barriers that
survived the wave of liberalization in the
1980s and 1990s, and which have, over time,
contributed to unduly high costs for theeconomy as a whole.  The issue of Indonesia's
competitiveness had in fact already become a
concern in 1996, when growth in exports, a
main economic strength, started to decelerate.
7. As reforms will inevitably take time,
the recovery of the Indonesian economy is
unlikely to be rapid.  After the collapse of
activity in 1998, the most optimistic scenarios
forecast a stabilization of the economy in 1999
and a recovery in 2000.  Consequently, theliving standards of Indonesians as a whole
cannot be expected to return to their pre-crisis
levels before the early years of the next
century.  Before the crisis is over, however, a
substantial proportion of Indonesia's
population will have  slipped back below the
poverty line.(2) INSTITUTIONAL FRAMEWORK
8. Whereas during the past three
decades, Indonesia's institutional and political
structures were characterized by a high
degree of stability, the economic crisis thatarose in the second half of 1997 created the
conditions of a major political transition,
involving the preparation of free democratic
elections and the elaboration of  a new
constitution.
9. Until the recent financial crisis, there
were few changes in administrative
responsibilities concerning economic policy,
apart from the merging in 1995 of the Ministry
of Industry and the Ministry of Trade into onesingle entity, the Ministry of Industry and
Trade, which is now responsible for all
domestic and international trade matters.
Since the crisis, however, important changes
have been introduced to implement the
programme of economic reforms.  The
National Economic and Financial ResilienceCouncil, a body chaired by the President of
the Republic, was established to supervise
implementation of the reform programme.
Bank Indonesia was granted autonomy over
the formulation and the implementation ofmonetary policy.  The supervision of
state-owned enterprises was transferred from
line Ministries to a newly-created Ministry for
State-Owned Enterprises and a Privatization
Board was established.  Finally, theGovernment created the Indonesian Bank
Restructuring Agency (IBRA), a financial body
responsible for the restructuring of Indonesia's
ailing banks.
10. Indonesia's legal system, particularly
the laws and regulations pertaining to
business, has been modernized.  Prior to the
financial crisis, Indonesia had already revised
its Company Law and introduced new
Customs and Intellectual Property Rights laws
in order to give full effect to obligations
undertaken in the context of WTO Agreements.Since the beginning of the crisis, the process of
legal reform has accelerated.  A major review
of the Bankruptcy Law, the Banking Law, the
Central Bank Law, the Company Law andIndonesia WT/TPR/S/51
Page xi
liquidation regulations is underway.  Other
priorities involve the establishment of a more
effective Commercial Court System and the
introduction of clearer competition rules.
Continued progress in these areas would make
a major contribution to restoring theinternational business community's confidence
in Indonesia.
11. Following significant liberalization in
the period 1993-95, and, as a result of the
reforms in 1998, Indonesia's investmentregime is now very open.  Partly as a result,
Indonesia has attracted unprecedented
amounts of foreign direct investment (FDI)
since the 1994 Trade Policy Review.  While
reflecting a legitimate desire to maintain itslocational advantage, the increasing resort to
tax incentives for investment may be
worrisome as it tends to encourage
over-investment in non-competitive sectors,
increases forgone tax revenues at a difficult
time for the budget, and contributes to
regional tax competition (with Indonesia notthe only country in the region using investment
incentives).  Instead, Indonesia's continued
pursuit of policies aimed at achieving a more
stable and transparent business environment,
including the modernization and enforcementof laws, will arguably constitute a more
effective way of attracting foreign investors.
(3) TRADE POLICY BY MEASURE
12. During the early part of the review
period (1994-96), when economic growth was
high, Indonesia continued to deregulate in a
pragmatic and gradual manner.  This
approach nevertheless allowed the process to
be highly selective and excluded some majorsectors from reforms.  Since the onset of the
financial crisis, however, Indonesia has
decided to extend reforms to even the most
protected areas of its economy.  With full
implementation, these re forms will make the
present period under review a watershed in
the process of liberalization.(i) Border measures
13. One of the most notable achievements
during the review period was the significant
reduction of applied tariffs, with the lowering
of rates going well beyond Indonesia's WTO
commitments.  Applied MFN tariffs have beenreduced from an unweighted average of about
20% in 1994 to 9.5% in 1998.  Further
unilateral tariff cuts are scheduled up to 2003
in accordance with a clearly defined
programme of tariff reduction.  By 2003, themaximum applied tariff for nearly all products
will not exceed 10%.  Already in 1998, tariffs
on food items have been reduced to a
maximum of 5%.  Nevertheless, high tariffs
continue to protect a few products such asalcoholic beverages, motor vehicles, certain
basic chemicals, and, to a lesser extent,
leather and textiles products.  While the
erosion of tariff peaks and gradual reduction
of all rates will alleviate the distortions
embodied in the tariff schedule, notably the
level of escalation, the process is stillincomplete.  Producers of final goods in the
manufacturing sector generally, and in the
textiles and clothing and wood industries, in
particular, continue to benefit from substantial
tariff escalation.
14. Until the financial crisis, limited
progress had been made in removing the array
of non-tariff barriers (NTBs), such as import
monopolies and restrictive licensing, as well
as export controls, which continued to affectup to 10% of imports, 40% of non-oil exports
and 30% of production.  In the sectors
concerned, NTBs and export measures were
often combined with other forms of assistance,
including restrictions on domestic trade, pricefixing and subsidies, all of which were aimed
at providing implicit or explicit protection on
various grounds (including infant industry
protection, security of food supply,
management of natural resources or
favouritism).  As a result, the list of products
benefiting from some form of protection orassistance was still extensive when the crisis
broke late in 1997, covering most strategic
food commodities, mining and wood
resources, key intermediate industrial goodsWT/TPR/S/51 Trade Policy Review
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(fertilizers, cement, iron and steel) and
transport equipment.
15. The removal of trade restrictions is at
the centre of Indonesia's current reform
process.  Besides the tariff reduction
programme, Indonesia has undertaken toremove all non-tariff barriers and export
restrictions not justified on health, safety or
environmental grounds by the end of the
century.  Accordingly, the number of tariff
lines covered by import licensing requirementshas fallen substantially (by half, overall, since
the last Trade Policy Review, taking into
account the fulfilment of WTO commitments).
Furthermore, local content programmes are
gradually being phased out.  Restrictions onexports are also being removed.
16. More specifically, Indonesia
deregulated trade in the main agricultural
commodities (except rice and soybeans, for
social reasons), terminated production and
trade monopolies in certain intermediate
industries (cement, plywood, rattan), andreduced export taxes on key commodities
(wood).  Further deregulation of trade,
particularly additional cuts in tariffs and
export taxes, is scheduled over the next two
years. It is also noteworthy in this time ofcrisis that Indonesia has resisted protectionist
pressures, including the temptation to use the
leeway to raise tariffs allowed by the growing
gap between bound and applied rates.
(ii) Internal measures
17. The restoration of confidence in the
Indonesian economy will also entail the
establishment of more rules-based,
transparent and competition-oriented internal
policies.  In the past, internal policiescontributed to the consolidation of the position
of large public and private conglomerates,
which continued their expansion in the
absence of clear competition rules and a
certain tolerance of restrictive marketing
arrangements and cartels.  In addition, these
conglomerates benefited from tax incentives,tax exemptions, subsidized lending, production
licenses and other formal and informalGovernment support. During the review
period, conglomerates continued to dominate
key sectors such as agri-food, steel, basic
chemicals, pharmaceuticals, forestry and
wood products, paper and communications.
They often received these internal (as well asexternal) privileges in return for their
implementation of the Government's
industrialization objectives.
18. The authorities have moved to address
a number of shortcomings in Indonesia'scompetition and regulatory framework
pertaining to business and in its protection of
intellectual property rights. Since the crisis,
the Government has terminated numerous
production and distribution monopolies in thecement, plywood, paper, cloves and other
sectors.  Indonesia also intends to introduce a
consolidated competition framework by the
end of 1998 and is committed to enhanced
transparency both in the granting of subsidies
and loans for Government-sponsored projects
and for the upcoming round of privatization.The economy might also benefit from more
streamlined, efficient and effectively enforced
government procurement practices.
(4) TRADE POLICIES BY SECTOR19. Prior to the crisis, trade and
investment liberalization had affected some
sectors more than others.  The provision of
assistance or protection for selected sectors
produced "winners", namely the netbeneficiaries, and "losers", that is the firms
who either did not benefit from privileges and
protective measures, or were adversely
affected by them.  Since the crisis, however,
there has been a growing realization that suchdistortions to competition constitute a major
impediment to improving the competitiveness
of the Indonesian economy.  Consequently,
since late 1997, Indonesia has to a large
extent deregulated trade and distribution in
agriculture, eliminated certain protection and
trade privileges in manufacturing, andprepared further steps to liberalize
telecommunications and financial services.
Together, these measures are integral to
Indonesia's economic recovery.Indonesia WT/TPR/S/51
Page xiii
(i) Agriculture
20. While liberalization in agriculture as
well as in forestry lagged behind that of the
rest of the economy until 1997, domestic and
international trade was largely deregulated in
late 1997 and early 1998.  Imports have beenthe most affected, with a large reduction in
tariffs and the removal of BULOG's monopoly
rights concerning all commodities under its
control (except rice, for social reasons).
Obstacles to domestic trade are also beingremoved and export controls substantially
relaxed.
21. Although the long term benefits of
these reforms are evident, there are difficulties
in liberalizing agriculture under the presentdifficult economic and social conditions.  With
the devaluation of the rupiah increasing the
cost of imported food, it has been socially
important that deregulation not trigger further
price increases.  Large subsidies are currently
necessary to stabilize domestic prices of
essential food items (including rice andcooking oil).  In addition, with the devaluation
of the rupiah, a number of agricultural items,
in which Indonesia is self-sufficient, such as
palm oil, became very competitive in the world
market.  It was thought that this could lead todomestic shortages, if exports materialized,
and add to inflationary pressure.  To deal with
these difficulties, the Government introduced
temporary export bans on rice, wheat, wheat
flour and other basic commodities;  these banswere converted into export taxes in September
1998.
(ii) Manufacturing
22. The trade and investment policies
followed by the Government during the pasttwo decades have been extremely beneficial to
the manufacturing sector.  These policies have
been continued during the period under
review.  Applied MFN tariffs in manufacturing
have been lowered to a simple average of
9.7% in 1998.  The average collected duty is
even lower, given that a high proportion ofproduction and trade takes place in duty-free
zones. The opening up of nearly all industriesto FDI between 1993 and 1995 helped attract
large amounts of FDI.
23. Despite liberalization, some parts of
manufacturing continued to be assisted by
high and escalating tariffs (automobiles,
textiles and garments), restrictive licensing(certain petro-chemicals), administratively
determined local-content requirements
(transport equipment), restrictive marketing
arrangements (paper, cement) and export
taxes (wood products).  While these policieshave encouraged the shift of production
towards higher value-added products, by
driving prices and costs above
import-competing levels, they also threatened
the long-term competitiveness of the industriesconcerned.  In the context of the present
reform programme, the Government is taking
steps to remove trade restrictions affecting
these industries.
(iii) Services
24. The expansion of services has gone
hand-in-hand with the overall development ofthe economy, which generated needs for
telecommunications, transport or financial
services, and with a change in policy focus.  In
areas such as telecommunications, aviation
and financial services, Indonesia graduallyabandoned its reliance on government control
and public monopolies.  As a result,
infrastructural services (telecommunications,
water supply, electricity) were largely opened
to FDI in 1994-95;  financial services werederegulated in the late 1980s and early 1990s;
and in the period under review, competition
was introduced in certain segments of the
telecommunications and air transport market.
25. Reflecting the domestic reform
process and external deregulation, foreign
access to the Indonesian services market has
increased.  In the Uruguay Round, Indonesia
made specific commitments in several services
areas in the GATS, and it added to these in the
recent WTO negotiations on
telecommunications (1996) and financialservices (1997), thereby contributing to their
successful conclusion.  Services are alreadyWT/TPR/S/51 Trade Policy Review
Page xiv
largely open to FDI.  In 1994 basic
infrastructure was opened to foreign investors,
provided a 5% minimu m of Indonesian equity
was maintained.  This encouraged foreign
firms to invest in telecommunications and
power generation, where they have becomemajor operators.  In 1998, the (main)
remaining restriction on FDI in services, i.e.
that on domestic (wholesale and retail) trade,
was removed.  As part of its efforts to
restructure the financial sector, theGovernment is currently considering relaxing
the remaining limits on foreign ownership in
banking.
(5) TRADE POLICIES AND FOREIGN
TRADING PARTNERS
26. The broad direction and objectives of
Indonesia's trade and investment policies have
not changed during the review period, but
have been given renewed impetus by the
present crisis.  Prior to 1997, trade and
investment liberalization already proceeded toa large extent on a unilateral basis, with the
benefits of such liberalization being extended
on an MFN basis.  Current reforms are also to
be implemented on an MFN basis. In several
cases, they complement (financial services) oranticipate (the elimination of certain
local-content requirements) the
implementation of existing WTO commitments.
27. Indonesia's commitment to
multilateralism has recently again beenconfirmed; in particular, this has been shown
by its timely (and in some cases advanced)
implementation of its Uruguay Round
obligations and additional commitments inrecent WTO negotiations covering information
technology, telecommunications and financial
services.  In its relations with ASEAN
partners, Indonesia adheres to the principle of
open regionalism, an approach that it also
promotes in the APEC forum.  Tariffreductions under the AFTA-CEPT scheme of
ASEAN have been kept largely in line with
unilateral MFN tariff cuts, so that the margin
of preference has remained small (around
2%).
28. Current reforms should therefore be
seen as a continuation, or, indeed, an
acceleration, of the kinds of trade and
investment policies that have greatly
contributed to Indonesia's economicdevelopment and integration in the world
economy over the past decade.  Fully
implementation of these reforms, together with
Indonesia's WTO commitments, would result
in Indonesia having one of the most open
economies among developing countries by the
turn of the century.
29. For their part, WTO Members, many
of whom already provide substantial financial
and technical assistance to Indonesia, can
lend further support to its unilateral economic
and trade reforms by resisting domesticprotectionist pressures.  The success of these
reforms in fostering Indonesia's eventual
economic recovery depends crucially on a
pick-up in exports, which itself relies heavily
on the maintenance of a stable, predictableand open international trading system.