RESTRICTED  
  
WT/TPR/G/401  
4 November 2020  
(20-7798) Page: 1/23 
Trade Policy Review Body   Original: English  
 
 
TRADE POLICY REVIEW  
REPORT BY  
INDONESIA  
Pursuant to the Agreement Establishing the Trade Policy Review Mechanism (Annex 3 of the 
Marrakesh Agreement Establishing the World Trade Organization), the policy statement by Indonesia  
is attached.  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note: This report is subject to restricted circulation and press embargo until the end of the 
first session of the meeting of the Trade Policy Review Body on Indonesia . WT/TPR/G/401 • Indonesia  
 
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  Contents  
1   OVERVIEW  ................................ ................................ ................................ .................  3 
2   ECONOMIC DEVELOPMENT  ................................ ................................ .........................  4 
2.1   Macroeconomic Performance  ................................ ................................ ........................  4 
2.1.1    Inflation  ................................ ................................ ................................ .................  6 
2.1.2    Exchange  Rate ................................ ................................ ................................ ........  7 
2.1.3    Recent Development on Fiscal Policy  ................................ ................................ ..........  7 
2.2   Improvement on Investment Climate  ................................ ................................ ............  8 
2.3   Financial Sectors  ................................ ................................ ................................ ........  9 
2.4   Economic Challenges to Indonesia  ................................ ................................ ..............  10 
3   INTERNATIONAL TRADE ENGAGEMENT  ................................ ................................ .... 10 
3.1   Bilateral  ................................ ................................ ................................ ..................  11 
3.2   Regional  ................................ ................................ ................................ ..................  11 
3.3   Multilateral  ................................ ................................ ................................ ..............  12 
3.4   Roles at  the World Trade Organization  ................................ ................................ ........  12 
3.4.1    Agriculture  ................................ ................................ ................................ ............  12 
3.4.2    Non-Agriculture Market Access (NAMA)  ................................ ................................ .... 13 
3.4.3    Services  ................................ ................................ ................................ ...............  14 
3.4.4    Trade -related Aspect of Intellectual Property Rights (TRIPS)  ................................ ....... 14 
3.4.5    Environmental Issue  ................................ ................................ ..............................  14 
3.4.6    Trade Facilitation  ................................ ................................ ................................ ... 14 
3.4.7    Aid for trade ................................ ................................ ................................ ..........  14 
3.4.8    Fisheries  ................................ ................................ ................................ ...............  15 
3.4.9    Priority Issues  ................................ ................................ ................................ ....... 15 
4   TRADE AND TRADE RELATED POLICY  ................................ ................................ ....... 15 
4.1   National Economic Policy Packages  ................................ ................................ .............  15 
4.2   Sectoral Policies  ................................ ................................ ................................ ....... 15 
4.2.1    Agriculture  ................................ ................................ ................................ ............  15 
4.2.2    Fisheries  ................................ ................................ ................................ ...............  16 
4.2.3    Manufacture  ................................ ................................ ................................ ..........  17 
4.2.4    Services  ................................ ................................ ................................ ...............  18 
4.2.5    Public Stockholding (PSH)  ................................ ................................ .......................  18 
4.2.6    Standardization  ................................ ................................ ................................ ..... 18 
4.2.7    Micro, Small and Medium -Sized Enterprises (MSMEs)  ................................ .................  19 
4.2.8    Intellectual Property Rights  ................................ ................................ .....................  20 
4.2.9    State Trading Enterprises  ................................ ................................ .......................  20 
4.2.10    Trade Facilitation  ................................ ................................ ................................ . 21 
4.2.11    Information and Communication Technologies (ICT)  ................................ .................  22 
5   WAY FORWARD  ................................ ................................ ................................ ........  22 
 
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  1  OVERVIEW  
1.1.  Indonesia is predicted to enter new phase in its economic development, benefiting from 
demographic dividends contributed by the significant size of its labour force. According to 2018 
census data,  around 68% of Indonesia 's total population (179.13 million people) is in the productive 
age (15 -64 years old). And to ensure that this demographic bonus works towards Indonesia 's favour, 
the Government strives to provide Indo nesia's human capital resources with good quality education 
and training.  
1.2.  In the period between 2015 -2018, the expansion of domestic economic activities resulted in 
the creation of an additional 9 million jobs. The unemployment rate fell to 5.34 % in 2018, compared 
to the 5.94 % level in 2014. On the other hand, GDP per capita continued to increase from USD  3,531 
in 2014 to USD 3,927 in 2018, equaling to GNI per capita of USD 3,820. The poverty level lowered 
to a single digit (9.82 % in 2018), a tribute to the  effectiveness of poverty prevention program mes. 
Furthermore, a Gini ratio of 0.389 in 2018 compared to 0.414 in 2014 testified a reduction in income 
inequality. As to the Human Development Index (HDI), it recorded an increase from 68.9 in 2014 to 
71.39 in 2018.  
1.3.  During the same 2015-2018 timeframe, t he Indonesian economy grew steadily at an average 
rate of 5.0 % per year, higher than the 4.5 % per year average incurred by other developing 
countries. Amongst the factors contributing to this achievement  were the implementation of various 
structural reforms, including policies that improve the investment climate, enhance industrial 
competitiveness, upgrade logistics efficiency, stimulate export, promote tourism, and strengthen 
people's purchasing power.  
1.4.  Positive performances in various sectors of the economy drove this relatively high economic 
growth of Indonesia, with the service industry as the main engine growth. Service industry 
dominance continued into 2019,  with remarkable growth  of the information a nd communication 
services industry (9.41 %) as well as the transportation and warehousing industry (6.40 %). In 
contrast, manufacturing industry only grew 3.8 %. Meanwhile, the non -oil and gas manufacturing 
sector grew above 4 % in 2019.  
1.5.  On the expenditure sid e, investment was the major driver of economic growth, with an 
expansion rate averaging 4.45 % per year. The Government implemented a number of fiscal 
incentives, and demonstrated serious efforts in simplifying investment regulations and procedures 
to impro ve investment climate, along with developing supporting infrastructure to facilitate a higher 
level of business activities. During the same period, household consumption managed to grow an 
average of 5.0 % per year. Moreover , government consumption grew by an average of 3.0 % per 
year amid declining state revenues. Meanwhile, both exports and imports of real goods and services 
grew at an average of slightly below 3 % per year.  
1.6.  The endeavour to maintain economic stability was rewarded with the well -managed infl ation 
and exchange rates, increasing foreign exchange reserves, and the state of current account deficit 
within its safety limit. Between 2015 -2018, inflation rates were stable , averaging 3.3 % per year. 
Amid efforts to control the exchange rate and current  account deficit, the balance of payments 
continued its relatively strong position. Meanwhile, foreign exchange reserves increased from 
USD 111.9 billion in 2014 to USD 120.7 billion in December 2018.  
1.7.  Fiscal policies took into account medium -term fiscal su stainability, and resulted in a debt ratio 
lower than 30 % of GDP, as well as a budget deficit and primary balance that continued to shrink 
and led to positive values by 2018.  
1.8.  The strong and stable economic performance has trickled down as increased welfare  for the 
Indonesian people not only during the period of this trade policy review, but also projected for some 
years following it. However, a number of prevailing uncertainties will cast a shadow the performance 
of the global economy, which will also direc tly and indirectly affect the performance of Indonesia 's 
economy. Global economic growth and trade are expected to slowi ng down by an estimate of 3.6 
and 3.8 % per year respectively, for the years 2020 -2024. The price of Indonesia's main international 
expor t commodities, including coal and palm oil,  are also expected to decline, along with the shift in 
the world 's demand for alternative sources of energy. Other anticipated factors of uncertainty include WT/TPR/G/401 • Indonesia  
 
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  the trade war, China 's economic slowdown, and the infla tionary pressure from  monetary policy 
normalization in the United States and the European Union.  
2  ECONOMIC DEVELOPMENT  
2.1  Macroeconomic Performance  
2.1.  Despite the ongoing global economic turmoil that has caused a reduction in trade volume and 
slowed down economic  growth, the Indonesian economy managed to demonstrate a positive 
performance up to the first semester of 2019, with consumption growth, government spending 
realization, and positive net export contributions as the leading driving forces.  
2.2.  The stability of economic growth from 2016 to 2019 reflects Indonesia 's macroeconomic 
achievement. Although economic growth slowed down in 2019 due to decreasing net export during 
the second semester of 2019, growth in the economy was still maintained around 5%.  
Chart 2.1 Economic Growth Realization, 2014 -19  
(%, YoY)  
 
Source:  Indonesia Statistics . 
2.3.  In 2019, the growth of GDP and its main driver, the household consumption, remained at 
5.02% and 5.04 % respectively. Household 's consumption, represented by non -profit institutions, 
shrank at -0.62% in 2015 and reached its highest at 12.19%  in 2014. The government consumption 
had growth level of 3.25% in 2019 , partly due to the Government 's decision to set forth the full  
allocation of social aid  for poor society . Although the government consumption rate in 2019 is slower 
compared to growth rate in 2018 (4.8 %), the share for social aid increased from 6 % to 8%. 
Table 2.1 GDP Growth Realization in the Expenditure Side, 2015 -2019  
(%, YoY)  
Descriptions  2014 
(baseline)  2015  2016  2017  2018  2019  
PDB Growth  5.01 4.88 5.03 5.07 5.17 5.02 
Household Consumption  5.15 4.96 5.01 4.94 5.05 5.04 
Non-Profit Institutions 
Serving Households 
Consumption  12.19  -0.62 6.64 6.93 9.10 10.62  
Government Consumption  1.16 5.31 -0.14 2.12 4.80 3.25 
Investment (Gross Fixed 
Capital Formation – PMTB)  4.45 5.01 4.47 6.15 6.64 4.45 
Goods and Services Export  1.07 -2.12 -1.66 8.90 6.55 -0.87 
Goods and Services Import  2.12 -6.25 -2.41 8.07 11.88  -7.69 
Source:  Indonesia Statistics.  Viewed at: 
https://www.bps.go.id/publication/2020/05/29/e0e4f4ed95af42a44f97decf/produk -domestik -bruto -
indonesia -menurut -pengeluaran --2015-2019.html .  
5.01
4.885.035.075.17
5.02
2014 2015 2016 2017 2018 20194.74.84.95.05.15.2Chart 2.1   Economic growth realization, 2014 -2019
Source: Indonesia Statistics.(Percent, YoY)WT/TPR/G/401 • Indonesia  
 
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  2.4.  On the other hand, investment in 2019 experienced a slowdown, growing at below 5 %. The 
US-China trade war, which caused global economic uncertainty, contributed to this slowdown. 
Meanwhile, net exports contributed positively, driven by the contracted growth of imports relative 
to export growth.  
2.5.  The service sector – including corporate services, information and communication services, 
health services, and social activities – contributed significantly to t he growth of business activities. 
The three sectors, respectively, were able to grow by 10.25 %; 9.41 %; and 8.68 % (YoY). The 
manufacturing industry grew at a rate lower than the 3.80 % incurred by the economy, due to the 
contraction experienced in the oil an d gas processing industry. The agriculture sector grew at 3.64 %, 
which is slightly lower than the 2018 rate. This relatively stable growth in the agriculture sector was 
made possible by the high growth incurred in the plantation sub -sector, livestock, and fisheries.  
Table 2.2 GDP Growth Realization in the Supply Side , 2015 -2019  
(%, YoY)  
Descriptions  2014 
(baseline)  2015  2016  2017  2018a 2019b 
Accomodation, Food and 
Beverages  5.77 4.31 5.17 5.41 5.68 5.80 
Information and 
Communication  10.12  9.70 8.88 9.63 7.02 9.41 
Financial Services and 
Insurance  4.68 8.58 8.93 5.47 4.17 6.60 
Real Estate  5.00 4.11 4.69 3.60 3.48 5.74 
Company Services  9.81 7.69 7.36 8.44 8.64 10.25  
Government Administration, 
Defence and Mandatory 
Social Security  2.38 4.63 3.20 2.05 7.00 4.67 
Education  5.47 7.33 3.84 3.72 5.35 6.29 
Health Services and Social 
Activities  7.96 6.69 5.16 6.84 7.15 8.68 
Other Services  8.93 8.08 8.01 8.73 8.97 10.55  
Agriculture, Forestry, and 
Fishery  4.24 3.75 3.37 3.92 3.89 3.64 
Mining and Excavation  0.43 -3.42 0.95 0.66 2.16 1.22 
Processing Industry  4.64 4.33 4.26 4.29 4.27 3.80 
Electricity and Gas Supply  5.90 0.90 5.39 1.54 5.47 4.04 
Water Supply, Waste 
Management, Waste and 
Recycling  5.24 7.07 3.60 4.59 5.56 6.83 
Construction  6.97 6.36 5.22 6.80 6.09 5.76 
Wholesale and Retail; Car 
and Motorcycle Repair  5.18 2.54 4.03 4.46 4.97 4.62 
Transportation and 
Warehousing  7.36 6.71 7.45 8.49 7.06 6.40 
a Temporary figures . 
b Very temporary figures . 
Source:  Indonesia Statistics.  Viewed at: 
https://www.bps.go.id/publication/2020/ 06/12/7fe8d749c43bad46b1601662/pendapatan -nasional -
indonesia -2015-2019.html .  
2.6.  Overall, the growing trend of economic growth in the last five years, along with the continued 
increase in GDP per capita, have tansmit ted positive impacts on people's welfare. As of July 2020, 
World Bank categorized Indonesia as an upper -middle -income country .1  
 
1 World Bank. Viewed at: https://blogs.worldbank.org/opendata/new -world -bank-country -
classifications -income -level-2020-2021. WT/TPR/G/401 • Indonesia  
 
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  Chart 2.2 GDP per Capita in USD , 2014 -19 
 
Source:  Statistics Indonesia. Viewed at: 
https://www.bps.go.id/publication/2020/05/29/e0e4f4ed95af42a44f97decf/produk -domestik -bruto -
indonesia -menurut -pengeluaran --2015-2019.html . 
2.1.1   Inflation  
2.7.  Indonesia well maintained the inflation within the target range. Since the last review, the 
inflation rate was relatively stable within the target range. Inflation was a bit high in 2013 and 2014 
because of the increase in energy prices due to the reallocation process of energy subsidies towards 
infrastructure and socia l development. Since 2015, the inflation rate was moving within the range 
of 3% ±1. Moving forward, we project the inflation to remain around 3 % ±1 on the back of stable 
food prices, stable administered prices, and well -anchored inflation expectations.  
Chart 2.3 Inflation Rate,  2013 – February 2020  
 
Source:  Bank Indonesia . 
2.8.  Concerted efforts between the Government and the Central Bank help to ensure the 
achievement of the target. The stable inflation rate in the last five years was achieved by maintaining 
core inflation, maintaining volatile food stability, and controlling administered price inflation. Thi s 
achievement was driven by concerted efforts to strengthen the coordination of inflation policies 
between the Government and the Central Bank (Bank Indonesia), both at the central and regional 
levels.  The Government and BI ha ve implemented four strategies  to achieve the inflation target, 
namely price affordability (stabilizing the price and managing the demand side), supply availability 
3,491.603,334.553,570.283,877.033,927.224,174.92
2014 2015 2016 2017 2018 201905001,0001,5002,0002,5003,0003,5004,0004,500Chart 2.2   GDP per capita in USD, 2014 -2019
Source: Data provided by the authorities
8.38 8.36
3.353.023.61
3.132.72 2.682.98
0123456789
-505101520
2013 2014 2015 2016 2017 2018 2019 43831 43862% %
CPI (%, yoy) rhs
Core (%, yoy) - lhs
Volatile Food (%, yoy) - lhs
Administered (%, yoy) - lhs
Feb-20 Jan-20WT/TPR/G/401 • Indonesia  
 
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  (strengthening production, government food reserves and food export -import 
management/strengthening institution), well -managed distribution (encouraging trade cooperation 
between regions/improving trade infrastructure), and effective communication (improving data 
quality/strengthening central -regional coordination).  
2.1.2   Exchange Rate  
2.9.  The rupiah exchange rate was stable and consi stent with its fundamentals, despite pressure 
caused by external factors.  Indonesia has adopted a free -floating exchange rate system since 
August  1997, under which market forces determine the exchange rate. Since the last review, the 
Rupiah exchange rate t ends to depreciate  due to the increasing global uncertainty mainly from the 
impact of the US normalization policy and slowing global economic condition . On the other side, low 
inflation, improved current account deficit, a successful tax amnesty program me, and a sustained 
economic transformation were beneficial to Rupiah 's stability. Nevertheless, the recent rebalancing 
of foreign capital inflows from developing countries to developed countries due to COVID -19 has 
exacerbated exchange rate pressures, leadin g to depreciation since the middle of February 2020.  
2.10.   Sets of policy mix managed to maintain the Rupiah exchange rate to move in line with its 
fundamental. To further maintain the stability of Rupiah, Bank Indonesia has implemented several 
measures. First, a pre -emptive, front -loading and ahead -of-the-curve policy response to stabilizes 
the Rupiah and consistently anchor inflation expectation. Second, conducting dual intervention in 
the FX market and government securities secondary market to encourage fair p rices in the financial 
markets and maintain adequate liquidity in the money market. Third, the monetary operations in 
the foreign exchange and money markets were also strengthened to maintain adequate liquidity. 
Finally, through intensive communication, es pecially to market players, banks, businesses, and 
economists . 
Chart 2.4 Exchange Rate (IDR/USD), 2014 – Q1 2020  
 
Source:  Bank Indonesia.  
2.1.3   Recent  Development on Fiscal Policy   
2.11.   In general, state budget realization – i.e. its use relative to its declared commitments – 
showed good performance in the years between 2014 to June 2019 . In terms of state income and 
revenue including grants, there incurred a positive trend until the end of June 2019. In the  2019 
state budget, revenues and grants were estimated at IDR 2,165.11 trillion, an increase of 11.39 % 
from the 2018 figure. As of June 2019, income from state revenues and grants reached 
IDR 898.76  trillion or 41.51 % of the 2019 estimate or  an increase by 7.84 % compared to that in 
11833
8,0009,00010,00011,00012,00013,00014,00015,00016,000
Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1
2014 2015 2016 2017 2018 2019 2020USD/IDRExchange Rate USD/IDRWT/TPR/G/401 • Indonesia  
 
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  the previous year. Tax revenue, which reached IDR 688.94 trillion or 76.65 % of total state revenue 
and grants, contributed to the increase.  
2.12.   In the period from 2014 to 2017, the tax ratio exp erienced a stagnant growth. However, 
starting in 2018, the tax ratio began to show a positive development, driven, among others, by the 
increase in commodity prices, especially oil and coal. The increase in commodity prices also resulted 
in an increase in Natural Resources Non -Tax State Revenues (NR NTSR), which reached 
IDR 181.06  trillion in 2018 (a 62.93 % increase from its 2017 level). By 2019, the tax ratio wa s 
targeted to increase to 11.06 % of GDP. Until June 2019, the tax revenue reached IDR 688.94 tri llion 
or 38.56 % of the 2019 state budget target.  
2.2  Improvement  on Investment Climate  
2.13.   In order to facilitate large -scale investment and encourage investment in industrial areas,  the 
government – through the Chairman of BKPM (the Investment Coordinating Board ) Regulation 
No. 14 of 2015 – introduced the Investment Principle License (Izin Prinsip ) in October 2015.  
Izin Prinsip , which cuts down the processing time to three days, applies to enterprises bringing in 
investment with a minimum total value of IDR 100 b illion and employing at least 
1,000 (one thousand) workers.  
2.14.   Investment processing time was further cut down to a one -day time period in end of 2017 
through BKPM Regulation No.  13 of 2017, replacing Izin Prinsip  with introducing Registrasi Investasi  
(Investment Registration), which allowed investors to complete the start -up procedures – namely, 
the investment licensing procedure and investment facilities procedure – in a more rapid manner. 
Under this licensing mechanism, investors in certain  business field may directly obtain Izin Usaha  
(Business License) and be able to jump straight into construction activities.  
2.15.   In addition, the Government introduced the Ease of Direct Investment on Construction 
(Kemudahan Investasi Langsung Konstruksi/KLIK)  in Specific Industrial Areas scheme through the 
Chairman of BKPM Decree No. 24 of 2016, and as amended by the Chairman of BKPM Decree No.  41 
of 2018. The KLIK is available to investors in 47 industrial areas or bonded zone (including industrial 
parks), an d allows them to directly jump into the construction stage following the issuance 
Izin Prinsip . 
2.16.   Moreover, in order to further facilitate investors, licensing procedure started online services 
in July 2017, by offering Izin Prinsip  in digital format. Then i n January 2018, the digital format of 
Izin Usaha  followed suit and allowed for further optimize of the online licensing services by 
synergizing various sectoral licensing regime of line ministries/government bodies under the 
One-Stop Service Center ( Pelaya nan Terpadu Satu Pintu /PTSP).  The OSS is a web -based investment 
licensing system that was implemented through the Government Regulation No. 24 of 2018 on the 
Electronically Integrated Business Licensing Service.  
2.17.   Indonesia has also improved several policies  on investment incentives, among others that of 
Tax Holiday. According to the new regulation, Tax Holiday applies for 18 pioneer industries, which 
are specified into 169 sectors (under the Indonesia Standard Industrial Classification/KBLI). 
Furthermore, Ta x Holiday currently also includes investments with the total value starting from of 
IDR 100 billion. The Tax Holiday facility is accessible through the OSS system.  
2.18.   The Negative Investment List (NIL) was enacted through the Presidential Regulation No. 44 
of 2016 on Lists of Business Fields that are Closed to and Business Fields that are Open with 
Conditions to Investment.  Overall, the 2016 NIL provides further opportunities for foreign 
investment in comparison with the previous NIL (Presidential Regulation N o. 39 of 2014). 
Amendments introduced by the 2016 NIL have further liberali zed investment rules across a range 
of sectors.  
2.19.   Numerous sectors that had been previously closed or conditionally open to foreign investment 
were removed from the 2016 NIL. These se ctors are now 100% open to foreign investment. Notable 
sectors which are now entirely open to investment include, among others, trade activities (such as 
direct selling, distribution affiliated with production and futures brokerage), and hospitality and 
health services (such as production of pharmaceutical raw materials and hospital management 
services).  WT/TPR/G/401 • Indonesia  
 
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  2.20.   Domestic and foreign investment in the non -oil and gas sectors has been increasing during 
the period of 2014 -2018. In 2018, direct investment reached a tot al value of IDR 721.3 trillion, 
increasing 4.1% from the previous year 's value.  
2.21.   The Government continues to support the business community to explore investment 
opportunities abroad, and to take advantage of various economic partnership agreements enforced  
between Indonesia and partnering countries. Within the period of 2014 -2018, 51 Indonesian 
companies established their investment in foreign countries, such as the ASEAN countries, India, 
China, Saudi Arabia, and Australia. These investments were establish ed in various sectors, among 
others software, information and technology services, financial services, and pharmacy.2 
2.3  Financial Sectors  
2.22.   Indonesia 's financial market in the last five years had remained robust, characterized not only 
by a positive return but also by an improved capital market environment (in terms of its supply, 
demand, and infrastructure). The same situation applied to the financial services industry, where 
intermediation, risks profile, as well as capital adequacy ratios seemed st rong. 
2.23.   Since 2014, the Jakarta Composite Index (JCI) posted fluctuative annual returns but with 
positive trend, ranging from the low of -12.1% (in 2015) to the high of 22.3% (in 2014). During the 
2014-2018 period, the JCI posted a positive Cumulative Averag e Growth Rate (CAGR)  of around 
7.5% ytd per annum. In 2020, up to 10 March, JCI posted a negative return of -17.1%.  
2.24.   Financial intermediation of Indonesia 's financial services remained strong and positive since 
2014. Throughout the review period, banking an d multi -finance intermediation managed to grow at 
their potential level, supported by ample liquidity. On the banking sector, intermediation reached its 
highest growth of 12.1% YoY on February 2019. Although slightly decreased, banking intermediation 
continued to grow at a moderate level of 6.10 % YoY in January 2020, in line with the economic 
slowdown. As for financing distributed by multi -finance companies, the average growth had b een 
above 5.9 % since 2014 until December 2019, with lower growth since September 2019, hitting 2.4 % 
growth YoY on January 2020. Due to the C OVID -19 pandemic, banking intermediation growth is 
forecasted to be in the range of 6 -8%, revised from 8 -10% in the previous forecast in accordance 
with the revised 2020 economic growth projection.  
2.25.   Domestic financial institutions exhibit a generally robust condition in the last five years. Amid 
unfavourable economic condition, the domestic banking performances is still well maintained as 
indicated by stable and strong capital and profitability. Indonesian banks are well -capitalized, as 
shown by the Capital Adequacy Ratio (CAR) that remains high above 20%. The improvement in 
credit quality during the last years has also k ept the Net Interest Margin (NIM) of banks as the 
highest in the region, which was 5.03 % on average annually for the last five years. High profitability 
with strong capital performances of financial services industry are maintained to be resilient enough 
in mitigating any potential shock.  
2.26.   Non-performing loan (NPL) and non -performing financing (NPF) remained at low level, 
well-maintained below the 5 % threshold, despite a hike in 2016 due to a decline in asset quality and 
sluggish commodity sector. NPLs of ba nking industry were ranging between 2 -3% in the past 
5 years, well below the threshold. Credit restructuring as well as prudent loan channelling managed 
to keep bad debt under control. Asset quality improved, in line with efforts to maintain a sound 
credit  risk. 
2.27.   In early 2020, the impact of COVID -19 outbreak was also seen in credit quality, where banking 
NPLs in January 2020 slightly increased with NPL ratio of 2.77% gross and 2.56% of multi -finance 
companies NPFs. Amid these conditions, the OJK has launche d new regulation as a stimulus to 
manage banking and non -banking industries. Liquidity also remained ample with sufficient ratio of 
liquid assets to non -core deposits (LA/NCD) has mostly been 90% which is well above the 50% 
threshold. This liquidity risk m easurement has shown resiliency in the banking system. The asset 
quality also has been improving, through the issuance of the Financial Services Authority ( Otoritas 
Jasa Keuangan/OJK ) regulation 35/POJK.05/2018 which further proved a strong commitment to 
 
2 fDi Markets, 2019. Online information ( www.fdimarkets.com ). WT/TPR/G/401 • Indonesia  
 
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  escalate the role of multi -finance industry in the economy while maintaining sound prudential 
macroeconomic policy . 
2.4  Economic Challenges to Indonesia  
2.28.   The then prevailing global economic conditions had impacted Indonesia's export performance 
in 2018, which de clined compared to in 2017. This decline had widened the trade deficit, causing a 
current account deficit that, in size, reached 2.98 % of GDP in 2018. Apart from the service sector, 
which had always experienced a trade deficit, transactions on primary reve nue also contributed to 
the widening of the deficit in the current account balance. In terms of the capital account, capital 
inflows or foreign direct investment (FDI) also experienced a slowdown in 2018. However, since the 
end of 2018, increased investor confidence in Indonesia 's economy has enticed foreign capital 
inflows. In the first quarter of 2019, total FDI grew 9.0 % (QoQ), which is better than the rate that 
prevailed in the fourth quarter of 2018, although it still grew negatively by -0.9% compared to the 
first quarter of 2018 (YoY).  
2.29.   Although the 2013 crisis was not a major, taper tantrums or normalization of monetary policy 
in the United States had slowed down of the Indonesian economy, which grew only by 5.78 %, 
accompanied by a weakening exchange r ate and CSPI (Composite Stock Price Index) in the stock 
exchange. Moreover, despite the threat of trade war between the United States and China that had 
significantly reduced the volume of global trade transactions throughout 2018, Indonesia's economy 
– compared to its peer  countries – still grew reasonably well by 5.17 %. Household consumption was 
the main contributor to this growth, and had, in the last four years, contributed an average of 56 % 
of growth in the economy, with rate of growth (of the househol d consumption variable) being 
maintained at an average of 5 %. The stability of the Indonesian economy continued until the 
beginning of 2019. In the first quarter of 2019, the Indonesia economy was able to grow by 5.07 %. 
2.30.   The performance of the economy had s hown improvements, but the dynamics of the global 
economy in 2018 exerted pressure on the Rupiah 's exchange rate and balance of payments. 
Indonesia's balance of payments in 2018 incurred a deficit of US D 7.1 billion, due mainly to the 
trade balance deficit; meanwhile, the services account incurred a surplus due to the surplus in the 
travel service sector. The primary and secondary income balance also improved, driven by an 
increase in investment income an d remittances. The pace of money growth in 2018 slowed, with an 
average growth of M1 of 8.73 % (YoY) and M2 of 6.90 % (YoY), due to efforts to maintain the 
depreciating Rupiah exchange rate of 6.89 % in 2018. The weakening of the Rupiah in 2018 was 
caused by a combination of external factors, including adjustments to the FFR (Federal Funds Rate) 
of the US ' Federal Reserve, Trade War, Brexit, and geopolitical changes. However, the Rupiah was 
relatively stronger than the currency of other developing countries su ch as the Indian Rupees, 
South  African Rand, Brazilian Real, and Turkish Lira which in 2018 each, respectively, depreciated 
by 9.23 %, 15.86 %, 17.7 %, and 39.26 %. 
2.31.   Having gone through various crises and challenges, Indonesia has proven to be a resilient 
count ry able to sustain development and grow its economy into becoming stronger. In 
commemoration of the 100 th anniversary of its independence in 2045, Indonesia is determined to 
become a sovereign, developed, just, and prosperous country, in accordance with th e Vision of 
Indonesia 2045. However, to realize that vision, there are still many challenges both in the short 
and long term. These challenges include output gaps, global uncertainty, demographics toward the 
aging population, middle -income traps, and econo mic transformation.  
3  INTERNATIONAL TRADE ENGAGEMENT  
3.1.  Between 2018 and 2019, Indonesia was active in initiating, conducting, and completing 
negotiations with various trade partners. The results of these negotiations became amongst the 
references in formulatin g various international economic and trade cooperation, as well as references 
in increasing engagement in various regional and multilateral cooperation s. The utilization of the 
results of the negotiations that have been implemented, is reflected in the 201 5-2019 NMTDP 
(National Medium -Term Development Plan).  WT/TPR/G/401 • Indonesia  
 
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  3.1  Bilateral  
3.2.  By the end of the time period covered in this trade policy review, Indonesia had implemented 
four bilateral trade negotiations, namely the Indonesia -Pakistan PTA , the trade in goods component 
of the Indonesia -Chile CEPA , the Indonesia -Japan EPA, and the Indonesia -Australia CEPA .3 
Three  bilateral negotiations were in the ratification stage, namely Indonesia -EFTA CEPA, 
Indonesia -Mozambique PTA, and Indonesia -Korea CEPA. Meanwhile , nine bilateral  negotiations were 
still ongoing or in the process of review, namely Indonesia -EU CEPA, Indonesia -Turkey CEPA, 
Indonesia -Pakistan TIGA, Indonesia -Tunisia PTA, Indonesia -Bangladesh PTA, Indonesia -Mauritius 
PTA, Indonesia -Morocco PTA, Indonesia -Iran PTA, and  the Protocol to Amend Indonesia -Japan EPA.  
3.3.  Indonesia has also initiated exploratory process in conducting 15 additional trade arrangements 
covering approximate 50 trading partners, as follows: 5 in Southern Africa; 15 in Western Africa; 
7 in Eastern Afric a; 1 in Northern Africa; 6 in the Persian Gulf; 1 in Southern Asia; 4 in 
South  America; 2 in the Pacific; and 5 in the Eurasian.  
3.2  Regional  
3.4.  During the time period covered by this trade policy review, Indonesia through ASEAN had 
implemented or ratified five  regional negotiations covering seven  trading partners, namely: the 
ASEAN -China FTA; ASEAN -Australia -New Zealand FTA (AANZFTA ); ASEAN -India FTA; ASEAN -Japan 
CEP; the ASEAN -Korea FTA ; and the ASEAN -Hong Kong FTA & Investment Agreement .4 
3.5.  Meanwh ile, one regional negotiation (covering one additional trading partner) are in the 
ratification process, namely  the ASEAN -Japan Investment, Service & MNP Agreements.  Additionally, 
two regional negotiations we re ongoing or in the process of review, namely  the ASEAN -India FTA; 
and ASEAN -Australia -New Zealand FTA (AANZFTA).  
3.6.  Within ASEAN, Indonesia and other ASEAN members are currently conducting a review process 
of the ASEAN Economic Community (AEC). During the time period of this trade policy review, 
Indonesi a and ASEAN also have five trade -related agreements, namely: the (1) 4th Protocol to 
Amend ASEAN Comprehensive Investment Agreement (ACIA); (2) 1st Protocol to Amend ASEAN 
Trade in Goods  Agreement (ATIGA) to Allow the ASEAN Wide Self -Certification; (3) ASEAN Trade in 
Services Agreement (ATISA); (4) Protocol to Implement 10 th Package of Commitment under ASEAN 
Framework Agreement on Services (AFAS); and (5) ASEAN Agreement on E -Commerce.  
3.7.  Beyond, the ASEAN and their six free trade agreement partners (China, Ko rea, Japan, Australia, 
New Zealand, and India) have worked together in negotiations on Regional Comprehensive Economic 
Partnership (RCEP). As the lead, Indonesia works to ensure that negotiations move toward more 
ambitious goals within the RCEP cooperation  framework, which covered many issues, inter alia , trade 
in goods, trade in services, investment, economic and technical cooperation, e -commerce, 
intellectual property, competition, and dispute settlement.  
3.8.  Indonesia 's economic and trade intra-regional interactions are further facilitated, amongst 
others, through intra -regional economic and trade cooperation such as the East Asia Summit (EAS), 
Asia-Pacific Economic Cooperation (APEC), and the Indian Ocean Rim Association (IORA).  
3.9.  Through APEC, Indonesia has continuously put forward diverse initiatives to promote and 
facilitate trade with the aim to achieve sustainable and inclusive growth. These include supporting 
the implementation of WTO 's TFA, enhancing Economies ' cooperation to  better participate in the 
GVCs and regional connectivity, optimizing the benefit of digital economy for all society and 
collaborating efforts to bridge the digital gap, addressing non -tariff measures that hinder trade in 
agriculture products, and promotin g the internationalization of and enhancing access for MSMEs in 
the Asia -Pacific Region.  
 
3 Implementation  of IA-CEPA starts from 5 July 2020 . 
4 The AHK -FTA entered into force on 4 July 2020.  WT/TPR/G/401 • Indonesia  
 
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  3.10.   As to IORA, in 2015 -2017, Indonesia took chairmanship to lead the grouping in presenting 
ideas and strategic initiatives in economic and trade cooperation that had bee n agreed during 
Indonesia 's presidency.  
3.3  Multilateral  
3.11.   Indonesia strives to continue to optimize its bridge -builder role on various major and 
emerging economic and trade -related issues of importance to the developing country members and 
the least -developed  country members, within the WTO process as well as outside the WTO 
framework.  
3.12.   Within the WTO, Indonesia makes the most of the multilateral trading system, firmly 
recognizing, in 1995, that the multilateral trading system was the fairest and beneficial tra ding 
system to the developing countries.  
3.13.   While there was no affirmation of the Doha Round 's continued commitment reflected in 
Ministerial Decisions in both the 10th WTO Ministerial Conference in Nairobi and the 11th WTO 
Ministerial Conference in Buenos Air es, there was also no agreement among members to stop the 
Doha Round negotiations. Therefore, Indonesia believes that it is important for members to continue 
negotiating the Doha Development Agenda (DDA) as mandated.  
3.14.   Outside the WTO framework, Indonesia su pported G20 Japanese Presidency in making WTO 
reform as priority issue. Indonesia also shared its views on the relevance of development elements 
as an integral part of the multilateral trading system, as well as on the urgency to provide strong 
political g uidance and strategic direction to improve the functioning of the WTO in order to support 
the maintaining of the WTO as the backbone of international trading system. In addition, Indonesia 
has benefitted from works of the G20 to project its national short -and-mid-term interests into the 
international fora, such as blended finance for SDGs financing, the role of creative industry in 
supporting economic growth, recognition towards biofuel as a way to reach cleaner energy use and 
development, family farming as  an important component in agriculture, and the role of women as 
agent of peace.  
3.15.   Within the broader multilateral framework, and in line with the WTO Trade Facilitation 
Agreement, Indonesia has actively participated in the negotiation on the Framework Agree ment on 
Facilitation of Cross -border Paperless Trade through the United Nations Economic and Social 
Commission for Asia and the Pacific (UNESCAP). Indonesia is also benefitting from various initiatives 
of the United Nations Conference on Trade and Developm ent (UNCTAD) to complement the process 
in other multilateral forums.  
3.16.   Other multilateral processes that have contributed to Indonesia 's work on the multilateral 
trade front are those affiliated to several international commodity institutions, such as, the 
International Tripartite Rubber Council (ITRC), International Coffee Organization (ICO), Association 
of Natural Rubber Producing Countries (ANRPC), Asian and Pacific Coconut Community (APCC), 
International Pepper Community (IPC), Council of Palm Oil Produci ng Countries (CPOPC), 
International Cocoa Organization (ICCO), and the International Coconut Community (ICC).  
3.17.   As one of the Founders and active Members of the international commodity organizations, 
Indonesia has contributed in determining the direction of the organizations. In 2019, Indonesia was 
elected as Chairman of the ICO, ANRPC and ITRC. Furthermore, in the ICO, Indonesia has been 
supporting the development of the global coffee industry by promoting better cooperation among 
coffee stakeholders, from b oth the production and consumption sides, towards price stability, 
sustainability and welfare.  
3.4  Roles at the World Trade Organization  
3.4.1   Agriculture  
3.18.   Indonesia 's engagement in agriculture -related meetings is conducted within the purview of 
the Committee on Agri culture Regular Session (CoA -RS) and the Committee on Agriculture Special 
Session (CoA -SS). WT/TPR/G/401 • Indonesia  
 
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  3.19.   Through the CoA -RS, Indonesia has completed its agricultural notifications from 2012 to 2018. 
Indonesia has also fulfilled its obligation to answer the Annual Quest ionnaire on Export Competition 
as mandated by the Ministerial Decision on Export Competition at the 10th WTO Ministerial 
Conference. Indonesia is currently at the finalization stage to implement the said mandate on 
eliminating its export subsidy entitlement.  
3.20.   Through the CoA -SS, Indonesia – along with the G33 and Cairns Group – has been negotiating 
for Agricu ltural reforms to address inequities and imbalances in the Uruguay Round Agreement on 
Agriculture, as well as to work towards ensuring a development -oriented trading regime that 
provides a level playing field to agricultural producers in developing country  members.  
3.21.   With the G33, Indonesia has been advocating for proposals that aim at poverty reduction, 
food security, and rural development. These proposals are on Special Products (SP), Public 
Stockholding for Food Security Purposes (PSH), and Special Safegu ard Mechanism (SSM). Indonesia 
strongly believes that amongst the strong signals the entire WTO membership can transmit to 
indicate the prevailing relevance of the WTO, and to give strong signal that the negotiating arm of 
the WTO is well and functioning, is a mutually acceptable permanent solution to the PSH as well as 
a balanced and agreeable outcome on SSM.  
Sanitary and Phyto sanitary  
3.22.   Through regular meetings of the Sanitary and Phyto sanitary (SPS) Committee, Indonesia has 
been conveying concerns (to memb ers) as well as responding to concerns (from members) over SPS 
measures that are deemed more trade restrictive than necessary. With agricultural products playing 
an important role in overall trade, Indonesia supports and participates in review processes th at aim 
to facilitate better operation and implementation of the SPS Agreement.  
3.23.   Moreover, Indonesia understands that sanitary and phytosanitary standards -setting is closely 
linked to members ' ability in conducting risk analysis and assessment techniques, w hich are a set of 
skills not automatically acquired by all members especially developing countr ies and LDC members. 
Hence, in order to level the playing field, Indonesia believes that technical assistance (TA) and 
Special and Differential Treatment (S&DT) should continue to be an integral part of the SPS 
Agreement.  
3.24.   In conjunction to members being urged to use risk analysis techniques developed by relevant 
international organizations, Indonesia complements its active participation in the WTO -driven SPS 
agend a with an active participation in the three standard -setting bodies relevant to SPS -related 
purposes, namely: Codex Alimentarius Commission (Codex) for food safety; International Office of 
Epizootics (OIE) for animal health and zoonoses; and International Plant Protection Convention 
Secretariat (IPPC) for plant health.  
3.4.2   Non-Agriculture Market Access (NAMA)  
3.25.   Indonesia has been pro -active in discussions on the non -agriculture market access, amongst 
other s by promoting transparency in measures related to technic al regulations, and encouraging 
members to reduce non -tariff barriers.  
3.26.   Since the last review, Indonesia has regularly participated in meetings of Committee on 
Technical Barriers to Trade (TBT)  to convey concern (to members) and respond to concerns (from 
other members). Indonesia strives to continue its active role in the committee, and improve the 
implementation of the agreement through various forums in the WTO, to ultimately lessen non -tariff 
barriers in global trade. One such effort is the establishment of the Indonesia National Committee 
for Internal Coordination on TBT in 2017  consisting all government institutions and stakeholders 
related to standardization and conformity assessment , to support the implementation of the principle 
of transparency in the  WTO TBT Agreement and formulate Indonesia's position in responding 
concerns from WTO members. In order to improve notification and inquiry tasks, the Government 
also develop a website  as an integrated media of information for stakeholders . In 2017, Indone sia 
updated its Harmonized System Nomenclature for Schedule XXI from HS 1996 to HS 2002. This 
update is notified under document G/MA/TAR/RS/458.  WT/TPR/G/401 • Indonesia  
 
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  3.4.3   Services  
3.27.   Indonesia still believes that Members ' effort in the ongoing services negotiations should be 
focused o n the important gains from the Doha Round that were achieved with the conclusion of the 
GATS and the Doha Mandate on progressive liberalization, as established on 15 April 2005 and at 
the 2008 Signalling Conference.  
3.28.   Amongst the notable points to this progressive liberalization mandate is that Developed 
members need to be more open to foreign workers, especially foreign workers from developing and 
LDC members, so that developing and LDC members could export more services. Nevertheless, for 
developing an d least -developed countries, before opening the markets for their service sectors, they 
must consider the level of development and readiness for liberalization in services.  
3.29.   In terms of services negotiation, Indonesia has been actively participating in the Joint 
Statement Initiative on E -Commerce. Indonesia also has yet to officially file a request to any of its 
negotiating partners. Indonesia would like to see negotiating partners make commitments that 
satisfy the demands of many developing members. Such co mmitments must support developing 
members ' aim to increase their services export, in particular that of Mode 4.  
3.4.4   Trade -related Aspect of Intellectual Property Rights (TRIPS)  
3.30.   Indonesia attaches importance to negotiations held under the TRIPS Council, and actively 
engages itself in discussions on related agenda items, such as: the Triplets Issue (Review of the 
Provision of Article 27.3B; Relationship between the TRIPS Agreement and the Convention on 
Biological Diversity; Protection of Traditional Knowledge and Folklore); Non -Violation and Situation 
Complaint (NVSC); and the Observer Status for CBD Secretariat and South Centre. For the Triplets 
Issue, Indonesia supports the amendm ent of Article 29 of TRIPS Agreement to provide legal 
obligation to incorporate Mandatory Disclosure Requirement in the patent application. Such legal 
obligation will prevent misappropriation of GRTKF and will ensure Prior Informed Consent and Access 
Benef it Sharing. At the domestic level, Indonesia made some progress in developing a database to 
prevent claims/misappropriation of GRTKF. Additionally, progress also came in the form of 
government regulation concerning access to genetic resources and the fair and equitable sharing of 
benefit arising from their utilization , namely Regulation of the Minister of Environment and Forestry 
No. 2/2018.  
3.4.5   Environmental Issue  
3.31.   Indonesia believes in a balanced approach to sustainable palm oil management, taking into 
account  the sector 's contribution in absorbing 17 million local workers, as well as the accompanying 
law enforcement against deforestation efforts. This approach has been Indonesia's commitment to 
the 2030 Agenda, which Indonesia presented at the WTO Committee on  Trade and Environment 
(CTE) regular meeting in June 2018 in Geneva.  
3.4.6   Trade Facilitation  
3.32.   In 2018, Indonesia notified categories of commitments to implement the TFA, and 
transparency obligations under the TFA. Indonesia has implemented all provisions, except  Advance 
Rulings, Risk Management, and Notifications for Enhance Controls or Inspections. In order to ensure 
the implementation of TFA, the Government of Indonesia has established the National Committee 
on Trade Facilitation. Indonesia continues to give it s best effort in order to fully implement all TFA 
provisions.  
3.4.7   Aid for trade  
3.33.   Indonesia fully endorses LDC members to benefit from the aid for trade scheme to encourage 
their integration into the world trading system, which minimizes the constraint LDCs fac e in 
international trade activities. As a middle -income country, Indonesia participates in aid for trade 
initiative both as a recipient and donor. Indonesia has already given aid for trade to a few LDCs 
through the South -South Cooperation mechanism, in ter ms of technical assistance.  WT/TPR/G/401 • Indonesia  
 
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  3.4.8   Fisheries  
3.34.   Indonesia participates actively in Fisheries Subsidies negotiations, and submitted a proposal 
in 2017. Indonesia has also notified fisheries sector subsidies in 2019 in accordance with the 
mandate of Article 25 of the  SCM Agreement.  
3.35.   In 2017, Indonesia tabled TN/RL/GEN/189.Rev1, which proposes a discipline on the 
prohibition for certain fisheries subsidies, and a discipline on special and differential treatment for 
developing countries. Indonesia believes that special a nd differential treatment should be the heart 
of the fisheries subsidies negotiation, considering the major contribution of the fishery sector to 
development in developing and LDC members. Additionally, Indonesia believes that an effective 
discipline must be in place in order to achieve the objective as mandated.  
3.36.   Indonesia also believes that subsidies related to IUU Fishing must not be tolerated, given such 
activities have great detrimental effects on the economic and social aspects. Moreover, Indonesia is 
also of the view that an effective fisheries management plan has a major contribution to deter 
overfishing and overcapacity. Therefore, it should be included in the discussion on achieving the 
intended results of fisheries subsidies discipline.   
3.4.9   Priority I ssues  
3.37.   In the context of the Doha Framework, Fisheries Subsidies are expected to be the next in line 
after the successful negotiation of the Trade Facilitation Agreement. The negotiation itself was 
mandated to be completed in 2019. Therefore, Indonesia cont inues to be actively involved the 
process in order to fulfil the mandate. In addition, Indonesia also considers the ocean sustainability 
aspect of the discipline.  
4  TRADE AND TRADE RELATED POLICY  
4.1  National Economic Policy Packages  
4.1.  Between 2015 and 2018, the Government has issued 16 national economic policy packages 
(NEPP) to encourage national industry and competitiveness amid the global economic slowdown. 
There are five NEPP which focus on trade -related policy development, especially on harmonizing 
exports a nd imports.  
4.2.  One of the focus of the NEPP is to encourage the competitiveness of national industries through 
deregulation, bureaucratization, and law enforcement and business certainty. Policy deregulation is 
intended to rationalize regulations by eliminati ng duplication, harmonizing regulations, and 
eliminating regulatory inconsistencies. There are 134 regulations that are reviewed to cut regulations 
that are considered to hamper the competitiveness of national industries.  
4.2  Sectoral Policies  
4.2.1   Agriculture  
4.3.  The agriculture sector remains as one of the most important sectors in the Indonesian 
economy, due to its ability in absorbing labor, in becoming the source of economic growth, and as 
a contributor to foreign exchange. The agriculture sector contributes 13.26%  of Indonesia 's GDP in 
2018. Agricultural development has helped reduce poverty, raise incomes, and improve food security 
– especially for those who live in rural areas and engage mainly in farming activities.  
4.4.  The Indonesian Government has also designated some specific and priority agricultural 
products into the self -sufficiency program me. Such designation applies to rice, which by far is the 
main staple food for the majority of the population. Other food crops that have also been designated 
are soybeans, c orn, sugar, and beef.  
4.5.  From 2015 to 2019, the import of some commodities (such as rice, corn, shallots, and chili) 
have reduced dramatically. On the other hand, agricultural export has increased by 29.7%, with 
total value of IDR 1.764 billion in 2018. Sever al export commodities showed significant growth, such WT/TPR/G/401 • Indonesia  
 
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  as palm oil by 22.5%, rubber 21.3%, coconut 14.8%, coffee 28.6%, durian 32%, mangoes teen 
252.61%, banana 706.2%, and pineapple 1.520%.  
4.6.  Since 2015, the Indonesian government has developed a set of policies to support family 
farmers. These policies are  based on a modernized, innovative, and holistic approach, and be 
implemented through several revolutionary breakthroughs. This program me has included shifting 
from traditional to modern agriculture thr ough provisions of high -tech machinery and high yielding 
varieties; changing existing policies; developing agricultural infrastructure and downstream 
industries; managing the supply chain; providing agriculture insurance for paddy and cattle; and 
empowerme nt for farmers and rural communities.  
4.7.  For the upcoming years from 2020 to 2024, the Government has set its policies toward 
strengthening agriculture human resources; improving agriculture modernization; optimizing 
utilization of land resources for food; an d strengthening agriculture competitiveness and export.  
4.2.2   Fisheries  
4.8.  Fisheries and aquaculture significantly contribute to the economy and food security. In 2014, 
the production of those two sectors reached 20.47 million ton nes, with further increase reaching  
24.31 million ton nes in 2018. Specific to fisheries, its contribution to the national GDP had gradually 
increased from 2010 to 2018, with an average growth of 6.56 % per year. Moreover, Indonesia 's 
export for fisheries products also increased in the period 2017 -2018, as much as 4.45 % in volume 
(tonnage) and 7.44 % in value (USD million). The main export commodities in 2018 were shrimp, 
tuna, squid -octopus, crab and seaweed. Meanwhile, the latest data demonstrates that fisheries 
sector contribution acco unted for 2.28 % of the National GDP in the second Quarter of year 2019, 
increasing 6.25 % compared to the same period in the previous year. This growth was mainly 
supported by the increase in marine capture fisheries and seaweed production.  
4.9.  In an effort to combat illegal, unreported and unregulated (IUU) fishing, Indonesia sets very 
strict measures, and continues a zero -tolerance policy for IUU fishing as stipulated in Law of the 
Republic of Indonesia No. 31/2004 as amended by Law of the Republic of Indonesi a No. 45/2009 on 
Fisheries. Furthermore, the Agreement on Port State Measures to Prevent, Deter and Eliminate IUU 
Fishing (PSMA) adopted in 2016 acts as an additional legal instrument that deters IUU fishing 
activities. The positive impacts of combating IU U fishing came in the form of an increased fish stocks 
to 12.54 million ton nes in 2016, and an increased prosperity of fishermen. In combatting IUU fishing, 
Indonesia has also cooperated with many partner countries and entities, both bilaterally or 
multila terally, and through international forums.  
4.10.   In developing its fisheries industry, Indonesia offers opportunities to foreign investors to 
conduct fisheries -related businesses, such as cold storage services, processing and aquaculture. 
Incentive includes prov iding investors with assurance on the sustainability of fisheries business in 
the fish processing industry as long as the fishery business is in the possession of a Processing 
Business Permit (SIUP).  
4.11.   In order to control the quality, safety and fish health assurance system of fish and fisheries 
products from upstream to downstream, Indonesia implements Good Handling Practices, Good 
Aquaculture Practices, Biosecurity system, Good Manufacturing Practices, and Hazard Analysis and 
Critical Control Point (HACCP) system. Complementary to these practices and systems are the 
respective competent authority who conducts the inspection, verification, surveillance and sampling. 
Meanwhile, to effectively ensure the flow of trade in fisheries, Indonesia continues to develo p 
bilateral cooperation with trading partners through Memorandum of Understanding (MoU) or Mutual 
Recognition Arrangement (MRA) in quality, safety and fish health assurance system.  
4.12.   Indonesia will continue its efforts to strengthening sustainable fisheries management 
including the eradication of IUU fishing and destructive fishing; strengthening sustainable 
aquaculture; improving competitiveness and added value of fish and fish products; increasing 
fisheries business and investment; calling up marine and fis heries industry; strengthening human 
resource capacities, innovation, research and technology; as well as developing marine -based 
regional approach.  WT/TPR/G/401 • Indonesia  
 
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  4.2.3   Manufacture  
4.13.   The industrial sector is the driver of national economic development, because it has been able 
to make a significant contribution in increasing added value, employment, and foreign exchange, as 
well as being able to make a major contribution in the formation of national competitiveness. The 
non-oil processing industry sector contributed 17.66% of th e total national GDP in 2018. Industry 
remained as the biggest contributor compared to other sectors. Sub -sectors with the highest average 
growth were food and beverages at 8.71 %; followed by metal goods, computers, electronic goods, 
machinery and equipmen t at 4.02 %; transportation equipment at 3.67 %; and chemicals at 3.40 %. 
4.14.   The 2015 -2035 National Industrial Development Master Plan (RIPIN) is stipulated by 
Government Regulation No. 14 of 2015, and is the implementin g instrument to the mandate on Law 
No. 3 o f 2014 concerning the industry, and simultaneously serves as a guideline for the government 
and industry players in industrial planning and development. RIPIN emphasized the seriousness of 
the government in realizing the objectives of industrial developmen t, that is: to make the national 
industry as a pillar and driver of the national economy; to increase the depth and strength of 
industrial structures; and to equitably distribute industrial development throughout Indonesia.  
4.15.   In an attempt to achieve these t hree goals, the Government device s a national industrial 
policy (KIN). The KIN is divided into three stages,  with the first stage (2015 -2019)  in effect within 
the timeframe of this trade policy review.  This first stage was intended to increase the value -added 
of natural resources in the upstream industry, especially industry based on agriculture and natural 
resources.  
4.16.   One of the sectors targeted by the Government is the development of the metal industry 
sector. Incentives are given to investment in metal sm elters, especially those that support increased 
domestic utilization (development of the automotive industry, government infrastructure projects to 
housing that has grown significantly in the last 5 years), and the development of new technologies. 
Steel pr oduct capacity is expected to grow from 12 million tons to 17 million tons in the next 5 years.  
4.17.   In the automotive sector, the policy of producing energy -efficient and affordable (LCGC) 
motorized vehicles has succeeded in transforming Indonesia's niche prod uct for the large middle -
low income market from two -wheel vehicles to four -wheel vehicles. Additionally, these LCGC 
motorized vehicles have also become a champion for Indonesian product s entering the export 
market. In the next 5 years, Indonesia targets to  initiate local production of two -wheel and 
four-wheel electric vehicles (EV) along with its components, building the required infrastructure and 
giving incentives (tax holiday and super deductible tax) for investment in research and development, 
technolog y transfer, and building the electric vehicle battery industry to ensure its linkage in the 
supply chain.  
4.18.   Food and beverages industry continue to be the biggest sub -sector in size, making up 36.9% 
of all non -oil processing industry. It is also the sub -sector with the fastest growth. In terms of 
increasing the value added and value chains of agricultural and marine based food and beverage 
products, the food and beverages industry strived to improve the quality of its products. Amongst 
the strategy being foll owed is by adopting internationally accepted product standards; giving tax 
deduction as a stimulus for innovation; and improving industrial human resources competencies 
through vocational education programs that are conducted in collaboration with similar initiatives in 
related industries, as well as through competency certification in accordance with industry needs.  
4.19.   The Government introduced the Making Indonesia 4.0 initiative, a road map to develop 
Indonesia 's manufacturing sector following industrial pra ctices characterized under the 4th Industrial 
Revolution (4IR) concept. The road map aims to double labor productivity, thereby increasing global 
competitiveness and lifting Indonesia 's global export market share. Indonesia's targets in 
implementing 4IR include: to make it into the world 's top 10 list of economic powers based on GDP; 
to double the ratio of productivity to cost; to secure a 10% contribution of net exports to GDP; and 
to allocate 2 % of GDP into research and development acti vities. The Making Indonesia 4.0 road map 
contains 10 national initiatives, all geared to accelerate the development of the manufacturing 
industry in Indonesia. These initiatives include: to enhance the flow of goods and materials; to 
redesign industrial z ones; to accommodate sustainability standards; to empower MSMEs; to put in 
place national digital infrastructure; to attract foreign investment; to improve the quality of human WT/TPR/G/401 • Indonesia  
 
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  resources; to develop the ecosystems for innovation; to give incentives for inv estment in technology; 
and to harmonize rules and policies.  
4.2.4   Services  
4.20.   In the last years, growth in services trade has contributed significantly to Indonesia 's 
economic growth. Data from Statistics Indonesia (BPS) depicts a higher QI to QII economic growth 
in 2019 compared to that of the same period in 2018, with growth reaching 5.02 % in 2019.  
4.21.   The structure of Indonesia's GDP, at current prices and in QIII -2019, was dominated by the 
service sector, which contributed up to 51% compared to the 48% figure during  the same period in 
2014. In the case of Indonesia, the service sector consists of construction services, wholesale trade 
and retail; car and motorcycle repair, transportation and warehousing, provision of accommodation 
and food and beverage, information a nd communication, financial services and insurance, real 
estate, corporate services, educational services, health services and social services and other 
services.  
4.22.   The Indonesian economy is also characterized the large number of labour force working in 
the services sector. International Labour Organization (ILO) data from 2018 depicts that the services 
sector absorbs around 48.1% of the available workforce, compared to 2017 which absorbed 47.2%. 
As a comparison, the ILO data records that the agricultural sec tor absorbs 29.6% of workforce, while 
the industrial sector accounts for 22.3%.  
4.23.   The development strategy for services sector includes initiatives to encourage the 
participation of domestic service providers in foreign trade, amongst others by increasing th e 
quantity and quality of the exports of priority services through: (1) increasing the utilization of 
priority services produced by domestic businesses, in order to provide incentives for the 
development of national service industries; and (2) optimizing r esources available within the 
networks global services production to improve the competitiveness of the services sector.  
4.24.   Consequently, with a view to support the above -mentioned strategy, efforts are made to: (1) 
increase promotion of Indonesian tourism; (2) increase the quality and quantity of exports of 
Tourism Services and Maritime Transportation Services; and (3) improve the quality and skill of 
Indonesian workers.  
4.2.5   Public Stockholding (PSH)  
4.25.   At the moment, the Government has only registered rice – specif ically, Government Reserve 
Rice (GRR) managed by state -owned Perum BULOG – in the WTO product coverage for PSH. GR R is 
aimed at supporting low -income producers (poor small -scale farmers) and national food providers. 
For five years from 2014 -2019, the exist ence of the GR R program me has kept the price of rice at a 
level affordable to domestic consumers.  
4.26.   Indonesia has actively carried out PSH notifications, as incorporated in the Domestic Support 
notification, wherein the last notification was reported for the  years of 2012 -2018. Indonesia 's 
market price support (MPS) during 2012 -2018 was always below the allowed de minimis  value of 
10%, ranging in value from 0.1 -0.85% of the total production value.  
4.27.   Moreover, Indonesia guarantees that its PSH products will not be exported to global markets, 
and, thus, will not cause trade distortion.  
4.28.   In Presidential Regulation (Perpres) No. 48/2016, the Government has defined the type of 
staple food, in addition to rice, that must be maintained in terms of supply availability an d price 
stability, namely corn, soybean, sugar, cooking oil, wheat flour, red onion, chili, beef, chicken meat, 
and eggs. Therefore, these products are considered as staple foods, and are justified candidates to 
be included in the PSH product coverage.  
4.2.6   Standardization  
4.29.   In the period of 2013 -mid 2020, Indonesia stipulated Law No. 20 of 2014 on Standardization 
and Conformity Assessment, which is the umbrella legal instrument for issues related to WT/TPR/G/401 • Indonesia  
 
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  standardization. The Law is implemented through the Government Regulation No.  34 of 2018 on 
National System on Standardization and Conformity A ssessment. These legal documents cover 
standard -setting and implementation, accreditation, certification, inspection, metrology, research, 
and development, cooperation, information system, mentoring, as well as monitoring and public 
participation.  
4.30.   Based on  the Presidential Regulation No. 4 of 2018 on National Standardization Agency (BSN), 
the BSN is the government institution in charge of standardization development, and has been given 
more responsibilities with the National Metrology Institute (NMI), which  was previously under the 
Indonesia Institute of Science (LIPI), being incorporated into the BSN organizational structure. This 
organizational change further strengthens BSN 's role as the national focal point in the fields of 
standardization, conformity as sessment and metrology.  
4.2.7   Micro, Small  and Medium -Sized Enterprises (MSMEs)  
4.31.   According to data from the Ministry of Cooperative and SMEs, there are approximately 
64.19  million unit s of MSMEs in Indonesia. These MSMEs made up 99.99% of total business in 
Indone sia, and employ more than 116 million people. In Indonesia, MSMEs are classified as business 
with assets ≤ IDR 10 billion, or turnover ≤ IDR 50 billion, as defined by the Law of Republic of 
Indonesia No. 20/2008.  
4.32.   At present, the largest number of internet  users in Southeast Asia are found in Indonesia. 
Meanwhile, Indonesian internet users is the third -largest in Asia, after China and India. In 2018, 
electronic commerce in Indonesia is estimated to reach USD 27 billion, making Indonesian economy 
in Southeas t Asia with the fastest -growing digital economy. The electronic commerce industry had 
significantly revolutionized the business practice of Indonesia 's MSMEs. Trade becomes more 
possible and more recordable, with numerous additional benefits in terms of en abling MSMEs to 
access credits from formal financial institution s. 
4.33.   In addition, Indonesia is also amongst the top five economies in the world with the most 
numbers of start -ups. The number of Indonesian start -up companies has reached 2150 in 2019. 
Four sta rt-up companies from Indonesia, namely Tokopedia, Traveloka, Bukalapak, and OVO have 
become unicorns, start -ups with valuations above USD 1 billion or equivalent to IDR 14 trillion. 
Go-Jek is the largest start -up company in Indonesia, which is now a USD 10  billion – or equivalent 
to IDR 140 trillion – decacorn.  
4.34.   Indonesia recognizes MSMEs as an engine of Indonesia 's economic growth. More than half of  
the revenue in the Indonesian economy is generated by MSMEs. The existence of electronic 
commerce has further  facilitated MSMEs in increasing income and employment opportunities, and in 
becoming more innovative and competitive. In order to improve the quality of human resources in 
cooperatives and MSMEs, the Indonesian government has conducted various training pr ograms, 
workshops, internships, and assistance with a variety of relevant and up -to-date themes including 
motivation and entrepreneurial skills, business management, vocational, cooperatives, etc. The 
program was carried out throughout Indonesia, across th e 34 provinces. Some program mes have 
more specific objectives and cross -cutting issues (involving several ministries and institutions), such 
as entrepreneurship and vocational training programs for underdeveloped regions, border areas, 
post-disaster, peopl e with disabilities, counter terrorism, priority sectors, etc.  
4.35.   The Government has developed several regulations to encourage the growth of electronic 
commerce in Indonesia, one of them is Presidential Regulation N o. 74 of 2017 concerning the Road 
Map of th e 2017 -2019 Electronic -Based National Trading System. The regulation contains directions 
and steps to achieve the government's goal of creating 1 ,000 technopreneurs by 2020, with a 
valuation of USD 10 billion and e -commerce transactions of USD 130 billion.  In addition, the 
government also issued the 14th NEPP, which is an initiative related to the ease in expanding access 
to technology -based start -up funding, consumer protection, and human resource education.  
4.36.   There are some other program mes and policies for  MSMEs provided by the Government, which 
include program mes and policies on financing and taxation. The main financing program me from the 
Government is called 'People Business Credit Program ' or 'Kredit Usaha Rakyat (KUR) ', which is 
intended to empower and encourage MSMEs to develop their business competitiveness.  WT/TPR/G/401 • Indonesia  
 
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  4.37.   The Government, through the Central Bank of Indonesia (Bank Indonesia), also issued Bank 
Indonesia Regulation No. 17/12/PBI/2015, which obliges commercial banks to integrate a minimum 
ratio of MSMEs financing in their credit activities.  
4.38.   The Government has also issued Government Regulation No. 23/2018 concerning income 
taxes on income from businesses received or obtained by taxpayers with certain gross circulations. 
Under the regulation, MSMEs are given the opportunity to choose income tax calculations that are 
appropriate to their character, either through 0.5 % of gross income or with calculations [0.25 - (0.6 
billion / gross income)] x taxable income.  
4.2.8   Intellectual  Property Rights  
4.39.   Indones ia has issued a regulation to administer the Collective Management Organization 
(CMO) under the Minister of Law and Human Rights Regulation No. 36/2018 on National Collective 
Management Organization (National CMO), providing regulations on the royalty dist ribution system 
to copyright holders. Moreover, taking down sites infringing copyright has also been carried out by 
the Directorate General of Intellectual Property (DGIP) in cooperation with the Ministry of 
Communication and Information. Indonesia has als o ratified two international treaties in the field of 
intellectual property since January 8th, 2020: (1) the Marrakesh Treaty , to facilitate access for 
persons who are blind , visually impaired , or otherwise print disabled in Indonesia ; and the Beijing 
Treaty on Audio -visual Performances .5 
4.40.   Regarding Trademark, Indonesia has acceded the Madrid Protocol with the Presidential 
Regulation No. 92/2017 on the Promulgation of Protocol Relating to the Madrid Agreement 
Concerning the International Registration of Mar k. 
4.41.   Concerning Geographical Indication, Indonesia has issued Law No. 20/2016 on Marks and 
Geographical Indications to replace Law No. 15/2001 on Trademark, and issued Government 
Regulation No. 51/2007 Number 51 of 2007 on Geographical Indication regulating the procedures 
for Geographical Indication registration to promote export. In 2015, DGIP strengthened the domestic 
stakeholders ' understanding on geographical indications through various seminars in collaboration 
with foreign parties and technical assistan ces for local governments.  In 2018, DGIP launched an 
application for Geographical Indication registration called e -Indikasi Geografis (e -Indigeo). This 
public service innovation was intended to facilitate online registration system.  
4.42.   Indonesia made improvem ents to the online Intellectual Property application service in 2018, 
namely through 'e-hak cipta ', an online copyright recording system which applies Cryptography 
Technology, making it easier for the public to register copyright digitally in one day. Indo nesia also 
made development in its e -Government system by building smart, effective, efficient, and 
transparent work culture through IT -based application system for budget implementation called 
'Electronic Administration System for Intellectual Property (E -SAKI) '. 
4.43.   On 17 August 2019, Indonesia launched an online system for registration of patent, 
trademark, and industrial design. Indonesia has also regulated intellectual property law enforcement 
under Government Regulation No. 20/2017 on Import Control of Go ods Allegedly/Originated from 
Infringement of Intellectual Property, and Minister of Finance Regulation No. 40.PMK.04/2018 on 
Recordation, Affirmative Action, Warranty, Temporary Suspension, Monitoring and Evaluation to 
Control Import and Export of Goods S uspected Infringing or Results from Intellectual Property 
Infringement. Currently, DGIP is conducting improvements to the online IP services, such as 
receiving online report on infringement to satisfy public needs and provide wider access for the public 
to intellectual property services.  
4.2.9   State Trading Enterprises  
4.44.   As one component to the national economic system, state -owned enterprises (SOEs) play a 
strategic role to raise prosperity of the nation by providing goods and services for the public; conduct 
 
5 The ratification of Marrakesh Treaty and Beijing Treaty regulated under Presidential Regula tion 
No. 1/2020 and No. 2/2020.  WT/TPR/G/401 • Indonesia  
 
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  economic activity including trade; increase national economic growth and state financial revenues; 
and to assist the development of SMEs.  
4.45.   The role of SOEs is manifested in business activities in almost all sectors, among others the 
agricultural sector (PTPN fo r plantation and Perum BULOG for agriculture commodities); 
manufacturing (PT. PAL for shipping and INKA for train transportation); fisheries (PT. Perikanan 
Nusantara and Perum Perikanan Indonesia); and mining and energy (PT. Pertamina).  
4.46.   Perum BULOG is regi stered as a State Trading Enterprises (STE) entity under the WTO. 
Throughout the time period of this trade policy review, Indonesia made notification up to the year 
2018, on trade activities conducted by Perum BULOG.  
4.47.   Perum BULOG 's duties are to carry out the procurement of paddy grain/rice to ensure the 
stability of domestic rice price by applying the Applied Administered Price (APP); to maintaining a 
stock of the Government Reserve Rice (GRR) for food security purposes; and to distribute GR to 
low-income people, victims of natural disasters, social conflicts, international aid initiatives 
addressing food insecurity.  
4.2.10   Trade Facilitation  
4.48.   Indonesia fully supports trade facilitation initiatives to encourage the presence of 
long-standing opportunities for invest ment and, consequently, economic growth through simplifying 
business procedures at the border and reducing unnecessary trade cost for export and import by 
implementing the provisions of the Revised Kyoto Convention of World Customs Organization (WCO) 
into Indonesia's national law.  
4.49.   During the 2015 -2017 period, the Government has made efforts to boost  Indonesia 's standing 
in the Ease of Doing Business Ranking (EoDB), through: implementing several programs such as the 
Single Billing Electronic Systems for Taxes, Customs Duties, Excise and other charges in all Customs 
Office; implementing Risk Management system at the border; and implementing Inaportnet System 
to support the movement (tracking and tracing) of goods in and out of the port area, and integrate 
the system with the Delivery Order (DO) Online system for handling goods and operation of Toll 
Road access. These programs and systems have improved the efficiency (i.e. minimizing port 
dwelling time) of the flow of goods in and out the Port of Tanjung.  
4.50.   Overall, this approach simplifies the trading system, amongst others by shifting prohibitive 
and restrictive supervision from border to post border , which has been in effect since 
1 February  2018. The approach also aims to address obstacles in attaining in dustrial 
competitiveness, that is obstacles such as limited access to imported raw materials and low export 
competitiveness.  
4.51.   These designated programs were successfully implemented and made positive result to 
Indonesia EoDB rank, especially on the aspect o f Trading Across Border indicators related to Time 
Needed for Documentary Compliance (Import and Export) which has reduced significantly since 
2015, as shown in the table below:  
Table 4.1 Indonesia Ease of Doi ng Business – Trading Across Border (TAB), 2015 -19 
TAB Indicators  2015  2017  2019  
EODB Rank (190 Countries)  120 91 73 
TAB DTF (Score 1 - 100) 63.53  68.57  67.27  
Time to Export: Border Compliance (hours)  53.3 53.3 53.3 
Cost to Export: Border Compliance (USD)  254 253.7  253.7  
Time to Export: Documentary Compliance (hours)  72 61.3 61.3 
Cost to Export: Documentary Compliance (USD)  170 138.8  138.8  
Time to Import: Border Compliance (hours)  99.4 99.4 99.4 
Cost to Import: Border Compliance (USD)  383 382.6  382.6  
Time to Import: Documentary Compliance (hours)  144 132.9  106.2  
Cost to Import: Documentary Compliance (USD)  164.4  164.4  164.4  WT/TPR/G/401 • Indonesia  
 
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  4.2.11   Information and Communication Technologies (ICT)  
4.52.   Indonesia has relaxed several regulations and simplified licensing process includes cutting the 
bureaucracy and implementing e -licensing, with the aim to boost the ICT business sector, and to 
increase foreign direct investment in the ICT sector. This polic y is expected to improve the quality 
of service, create a healthy business competition climate  as well as employment in the ICT sector. 
In developing the ICT sector, the government plays a double role as regulator as well as the engine 
for ICT ecosystem de velopment.  
4.53.   The challenge of an archipelagic country like Indonesia is to put in place the needed ICT 
infrastructure in order to connect all regions of the country. To address this challenge, the 
Government has launched the Palapa Ring Program, which is one  of the tools intended to increase 
connectivity in the economy. The program me comprised of a 36,000 kilometers -long fiber optic cable 
network covers Sumatra, Java, Kalimantan, Nusa Tenggara, Papua, Sulawesi and Maluku, and 
one backhaul to connect them all.  It is estimated that the Palapa Ring Program will contribute  an 
increase in regional GDP from around 4.5 % until 6.4%, as well as create 200 ,000 jobs in the next 
ten years. Additionally, the Palapa Ring will also provide 2.5 million users with broadband ac cess, 
improving market access for retail sectors in rural areas as well as increasing market access for the 
wider industry and manufacture sectors.  
4.54.   For the postal service sub -sector, the Public  Service Obligation (PSO) policy aims to broaden 
the provision of postal services to match the boom in e -commerce activities. The PSO will facilitate 
the physical movement of goods tied to virtual transactions. The PSO will, in general, address logistic 
development gap between rural and urban areas by facili tating logistic development in rural areas 
and making them part of global logistics chain.  
4.55.   The Government has fully maximized its effort in broadening public 's access to 
telecommunication infrastructure, where 4G connection and fiber optic facilit ies are found in all 
34 provinces. The infrastructure for 2G has reached 99. 19%, while that of 3G and 4G has reached 
96.30% and 97. 59%, respectively. In terms of land area coverage, 4G coverage has reached 
685.2  thousand square km out of Indonesia 's total area of 1 .8 million square km, with total 
residential coverage reaching around 92 %. In 2019, Indonesia succeeded in reaching the rate of 
broadband tariffs of 2.73 % of GDP per capita, as mandated in the Indonesia Broadband Plan 
(2014 -2019), with 5 % being the highest  rate.  
4.56.   The average internet speed (bandwidth) in Indonesia has also increased to 11.62 Mbps 
(download rate). In terms of equitable distribution of infrastructure, the percentage of households 
in Java that have enjoyed fixed broadband services is 13% , whil e in terms of cellular services, village 
penetration has reached 92.88%. The Government also issued various policies and regulations to 
improve infrastructure development and accessibility, mobile broadband penetration, affordability of 
broadband service p rices, as well as equitable distribution of infrastructure, ecosystems and services 
telecommunication.  
4.57.   On improving supporting facilities for e -commerce, the Government has in place three main 
program mes, namely: (1) digital economy ecosystem; (2) content management system; and (3) 
cyber governance. The digital economy ecosystem program me targets on improving the ecosystem 
for digital start -ups, facilitating MSMEs, fishermen, and farmers to go online, as well as facilitating 
the development of smart city. T he content management system program me targets on increasing 
digital literacy and internet content management skills of the general public in order to prevent the 
proliferation of contents that violate Indonesia 's law. While the cyber governance program me aims 
at improving the monitoring system over electronic transaction, ensuring respect for data privacy, 
and conducting further studies and evaluation of digital platforms.   
5  WAY FORWARD  
5.1.  For Indonesia, trade has been one of the tools towards attaining econo mic development. 
Hence, trade activities complement development efforts. This trade policy review is being conducted 
amidst global economic slowdown due to the COVID -19 pandemic. In the immediate and near future, 
trade policy will most likely be formulated  in response to the needs of the economic recovery efforts 
post-COVID .  WT/TPR/G/401 • Indonesia  
 
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  5.2.  Apart from the adverse effect of the COVID -19 pandemic on trade and the global economy, 
there are also various other uncertainties that need to be anticipated in evaluating the way for ward 
on Indonesia 's trade policy. These uncertainties already existed prior to the pandemic, and amongst 
them are the trade war, the economic slowdown in China, and the pressure of normalizing monetary 
policy that have switched from the US to the European Union. Additionally, the price of Indonesia 's 
main international export commodities – including coal and palm oil – is also expected to decline, 
along with the shifting of world demand on other commodities and products.  
5.3.  Post-COVID , exports of goods and services are targeted to grow. The increase in the exports 
of goods will be supported by the revitalization of the processing industry, thus encouraging the 
diversification of non -commodity export products and reducing import dependency. On the other 
hand,  the increase in the exports of services, particularly travel services, will accrue through the 
development of the tourism sector. Consequently, imports of goods and services will also grow, 
driven by the increase in domestic demand and investment.  
5.4.  To achi eve quality economic growth in the future, the Government has designated 
improvements in structural transformation as one of the priority policies. The policy is mainly driven 
by the revitalization of the manufacturing industry, while still encouraging the  development of other 
sectors through modernization initiatives on the agriculture, downstream mining, and sustainable 
infrastructure development sectors, as well as through the transformation of the services sector.  
5.5.  In Indonesia's NMTDP, one of the target s to reach the economic expansion of 2020 -2024 was 
to increase investment (gross fixed capital formation). To achieve this target, private investment 
(foreign and domestic) will be encouraged through deregulation of investment procedures, 
synchronization a nd harmonization  of licensing regulations, including the increasing of Indonesia's 
EoDB from rank 73 in 2018 to rank 40 in 2024. Additionally, the Government will also contribute to 
the increase in investment including through its state -owned enterprises, especially in infrastructure 
development. Hence, there will be an increase in ratio of the stock of infrastructure to GDP. Increased 
investment along with investment efficiency will be aimed at enhanc ing productivity, generate 
employment as well as to impr ove welfare all Indonesian people.  
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