I just finished reading How the World Became Rich: the Historical Origins of Economic Growth.
This book is written by two highly accomplished economic historians. It discusses how the world became prosperous. In general, human progress has been extraordinary. The poorest person on earth today has a better standard of living than the wealthiest people in medieval times. For example, many diseases that killed aristocrats in the past now have treatments. There’s no denying that poverty still needs to be eradicated, and Koyama & Rubin argue that learning from history can offer solutions for making the world even more prosperous.
Discussions about increasing the use of domestic products and anti-import sentiments have long echoed among public officials. Lately, these conversations seem to be growing ever more frequent. Of course, using domestically produced goods is not inherently a bad thing. The problem arises when it is forced. Like any other kind of love, love for domestic products is no fun when it is coerced. One of the instruments Indonesia is currently pushing hard is TKDN.
(update 7 April 2022: added no. 8 in table 1)
In recent days, the government has been grappling with rising cooking oil prices. The government is trying to keep cooking oil prices low. The President tasked the Ministry of Trade with ensuring price stability. The instruments used by the Ministry of Trade (MoT) include imposing a Domestic Market Obligation (DMO) on palm oil as the raw material for cooking oil, as well as setting a Domestic Price Obligation (DPO) for palm oil and a maximum retail price (HET) for cooking oil. Below is a summary of MoT regulations issued up to the time of writing.
Many have said the possible increase the price of various important commodities. However, Indonesia may be able to limit the inflation of some of these goods. This is because Indonesia imposes quota restriction in many of those goods.
This morning I watched “Ngobrol Tempo” on YouTube. The show featured officials from the Ministry of Industry, the Ministry of Trade, and Gabel, the electronics manufacturers’ association. The topic was how to pursue import substitution for electronics products, amid the Ministry of Industry’s policy to cut imports by 35%. I found the program quite interesting and was very pleased with how Bu Ratna from Tempo moderated the discussion. Several points struck me as particularly noteworthy.
On 24 February 2022, Russia attacked Ukraine. It was not entirely a surprise, as US intelligence had already indicated that Russia would invade Ukraine in the near future. At the time of writing, the war was still ongoing. Russian forces were attacking from three directions, and Ukraine’s Black Sea coastline had been almost entirely taken by Russia.
A couple of days ago, I was forwarded a news from Asia Nikkei by my colleague, Deasy Pane. The news is about Indonesia’s plan to ban exports of raw minerals (the likes of bauxite, tin, gold and copper) in the middle of 2023. This is not very surprising, knowing that nickel ore exports was banned in the start of 2020, with Indonesian President is willing to “fight in any way” of possible WTO complaint. Based on the strong export performance of nickel’s downstream industries, it is safe to say that the Indonesian President surely will expand the export ban.
This post is inspired by this tweet (in Indonesian).
Baru nyadar dampak pelarangan bijih nikel ternyata *sebesar* itu. Indonesia sekarang jadi eksportir stainless steel terbesar dunia, salah satu produk turunan feronikel.https://t.co/qonkL4o33d
Global Value Chain (GVC) is a buzzword that frequently comes up among academics and consultants when discussing international trade and manufacturing growth. The essence of GVC is splitting the production of a finished good into several links in a value chain, with each link produced in a different country. Take bicycles as an example: to assemble one bicycle, a manufacturer sources components from various countries.
Some time ago, Twitter was abuzz about minimum wages. The trigger seemed to be news about Minister of Manpower Ida Fauziyah commenting on how high minimum wages are in Indonesia. One widely shared report was tweeted by CNN Indonesia below.