The government is preparing Indonesia to become a permanent member of the Organization for Economic Cooperation and Development (OECD). This is considered to improve the national economy because it can be on par with developed countries. So far, Indonesia is in the accession stage and is targeted to be completed in the next three years. However, it turns out that Indonesia also has the potential to suffer losses if it rushes to join the OECD.
“There are several consequences of joining the OECD that could actually hinder the development of the manufacturing industry,” said Executive Director of the Center of Reform on Economic (CoRE) Mohammad Faisal, Monday (12/8).
Indonesia’s processing industry, he said, has the potential to experience a decline in performance due to the loss of the Generalized System of Preferences (GSP) facility or import duty exemption provided by the United States. The facility is only given by Uncle Sam’s country to industries from developing countries.
Membership in the OECD will make Indonesia seen as a developed country. Thus, the domestic textile and textile product (TPT) industry has the potential to no longer receive GSP facilities from the US, which is Indonesia’s main trading partner.
“Thus, it is possible, very likely that the manufacturing industry market abroad, the destination country, the US, for example, will be eroded. Especially the manufacturing industry that exports to the US such as the TPT industry, footwear,” explained Faisal.
In addition, the orientation of the OECD is inclined towards the interests of developed countries. While Indonesia from the Gross Domestic Product (GDP) level is still relatively far from the category of developed countries.
Also read: IMF Projects Indonesia’s Economy Will Stagnate in 2024 and 2025
As a result, Indonesia’s interests are likely not to be a priority even though it has become a permanent member of the OECD. The majority of developed countries, Faisal added, often apply non-tariff barriers policies to their trading systems.
It is mainly on high-tech products and meets the terms and conditions of environmental impact. “And in many ways, developing countries (like Indonesia) are not ready,” Faisal explained.
Another thing that also has the potential to have a negative impact on the Indonesian economy is related to the energy transition. Indonesia, which is currently still largely supported by the manufacturing industry, will be overwhelmed if it has to implement the OECD’s energy transition standards.
Because, until now the source of the movement of the manufacturing industry in the country still uses energy that is considered dirty by the OECD. “If we have to follow the interests of developed countries with clean energy, this means it takes effort, costs, while our competitive resources are there,” said Faisal.
“So, it means that if we are not careful, it will actually hinder the development of the manufacturing industry and that means it will also hinder economic growth,” he concluded. (Z-11)
#Rushing #join #OECD #Indonesia #lose
