Thursday, January 31, 2013


APEC’s supply chain connectivity and its benefit to agro-industry

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This year, Indonesia will host the Asia-Pacific Economic Cooperation (APEC) Conference in October 2013, and will hold four Senior Officials Meetings (SOMs), 12 Sector Ministerial Meetings, an APEC CEO Summit and the Economic Leaders Meeting. From Jan. 24 to Feb. 8, APEC, SOM I and related meetings are taking place in Jakarta.

APEC is an intergovernmental forum dedicated to promoting free trade, investment and economic cooperation throughout the Asia-Pacific region.

As stated earlier this month by Foreign Minister Marty Natalegawa, Indonesia will include its own national interest issues on the agenda such as economic resilience, improvement of small- and medium-scale business competitiveness, sustainable growth and food security.

One of the key issues in connection with food security is the sustainability of the supply chain in agricultural production.

The agro-industry — broadly described as the post-harvest activities involved in the transformation, preservation and preparation of agricultural products for intermediary or final consumption — occupies a dominant position in manufacturing as developing countries step up their growth.

In Indonesia, the agro-industry has become more important recently as data from the Central Statistic Bureau showed that in 2012, economic growth was spurred by the processing industry, many being agro-industries, responsible for 23.5 percent of Indonesian Gross Domestic Product (GDP).

The agro-industry processes the country’s top commodities, including oil palm, rubber, cocoa, fish, wood and paper.

In world’s food market, there is a growing trend of a global supply chain that involves the agro-industry and agriculture in developing countries.

Data reveals that since 2001 sales of global food processing has increased from US$250 billion in 2001 to more than $300 billion in 2008 (Mulle & Rauppener, 2010; 16).

As evidence indicates tariffs for agricultural goods and food-processing goods in the region have mostly been zero, in the future, the regional food supply chain will be a source of food security in Indonesia.

To be able to channel Indonesian products efficiently, rather than relying on supply from other countries, Indonesia should create an enabling environment and develop the capacity of small-hold farmers.

To create a favorable environment to boost the performance of the agro-industry, international cooperation is needed.

APEC has discussed a supply chain connectivity framework since 2010 and Indonesia is party to the negotiations.

The aim of APEC’s Supply Chain Connectivity Framework is to provide an enabling environment — logistics, transportation, cross-border transit, infrastructure — to APEC economies by developing partnerships among economies.

Out of eight points in the APEC Supply Chain Connectivity Framework, Indonesia has only participated in three: Action plan to improve transport infrastructure, action plan to improve local/regional logistics sub providers and action plan to enhance security and quality of cross-border communications. Indonesia led the analytical work for the logistics infrastructure sub-action plan.

To improve competitiveness in the agro-industry, Christy et.al (2009; 150), prescribes three kinds of enablers, which are essential (trade policy, infrastructure and land tenure), important (financial services, research and development, standard and regulation) and useful enablers (business linkages and business development services).

Referring to this scheme, the Indonesian government needs to improve international diplomacy in the food supply chain in order to increase competitiveness in the regional and world market.

Regarding prerequisites to survive the global food supply chain, developing the capacity of small-hold farmers also needs to be translated in policy language.

Besides the conventional “hardware” tools of the supply chain, such as infrastructure, service sector and trade policies, Indonesia also needs the “software” tool — research and development.

This discussion has been left out of the APEC Supply Chain Connectivity Framework, although under APEC Policy Partnership on Science, Technology and Innovation (PPSTI) the research and development area has been explored.

In some cases, trade among Asia Pacific economies can trigger the development of the agro-industry sector.

Vietnam, for example, has succeeded in developing an agricultural mechanization for rice
processing after the country imported machines from developed countries, thus, improving the quality and value of processing agricultural goods. Vietnam now is the second top rice exporter in the world market.

Why is Asia Pacific important for the Indonesian food supply chain? Economically, China, Japan, Singapore and America are the four principal export destinations for Indonesia.

Australia, an Asia Pacific economy, is also important for Indonesian export and import activities.

While Indonesia provides raw materials other APEC economies such as Australia, Japan, the US and Canada are advanced in service sectors that can bring positive contribution to our supply chain capacities.

Latin American countries, such as Chile, Peru, and Mexico, could be new channels for trade as Trade Minister Gita Wirjawan said that trade between Indonesia and Latin American economies was increasing by 10-20 percent after the ASEAN Latin Business Forum in 2012.

Another reason why Asia Pacific could be important for Indonesian agri-business is that politically Asia Pacific is the nearest extended network of ASEAN Economic Integration as well as ASEAN Integration.

APEC dialogue and agenda will benefit the transformation of the Indonesian economy from agriculture based to agro-industry based. Closer economic cooperation will enable the free movement of machinery and logistic services, which Indonesia needs.

Regional policy dialogue and communication will lead the Asia Pacific economies, including Indonesia, to harmonize sustainable standards of production regionally.

Thus, Indonesia as a chair of APEC Conference in 2013 should be able to pursue the important agenda of the food supply chain as part of national economic competitiveness as well as regional food security.

The writer is a researcher for the trade knowledge network program at the International Institute for
Sustainable Development (IISD). The opinions expressed are personal.

New govt system to oil the wheels of trade in ASEAN

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The government will soon introduce a system that will simplify the procedure for exporters to obtain a Certificate of Origin (C/O) for their products.

This will make it easier for business players to enjoy zero trade tariffs under the ASEAN Free Trade Agreement (AFTA).

The new system, which is still a pilot project, will grant some certified exporters the authority to issue invoice declarations for products to be traded within ASEAN.

Currently, the issuance of a C/O is under the authority of the Trade Ministry, which also sometimes involves officials at the regional administration, causing a long chain of bureaucracy. “Through this project, we aim to further facilitate trade within ASEAN and also increase the utilization rate of the [AFTA] preference,” the ministry’s newly-appointed director for ASEAN cooperation, Djatmiko Bris Witjaksono, told The Jakarta Post in Jakarta on Thursday.

As agreed during the ASEAN Summit in Cambodia last year, Indonesia will carry out the pilot project aimed at enabling business players, especially small and medium enterprises, to reap greater benefits under the AFTA, particularly the ASEAN Trade in Goods Agreement (Atiga), along with the Philippines and Laos.

Under a different arrangement, a similar project was earlier conducted by Brunei Darussalam, Malaysia, Singapore and Thailand in 2011.

Despite the low tariff, or zero percent tariff for trade between ASEAN members made available through the C/Os, only a few business players utilized the facility.

Out of Indonesia’s total exports to ASEAN members in 2011 of around US$40 billion, only 30 percent were covered by the facility, according to Trade Ministry statistics.

The figure was higher compared to the average utilization by other ASEAN members, which stood at 15.8 percent out of overall exports to Indonesia during a similar period.

The self-certification project would be part of the key measures that Indonesia took to anticipate the formation of the ASEAN Economic Community (by 2015), Djatmiko said.

Apart from this project, the government would also improve the country’s national single-window system to smooth the flows of trade within the Southeast Asia region.

The system would prompt cross-border traders to submit regulatory documents at a single location.

Indonesia plans to ratify several agreements, such as the trade in goods in transit and the ninth package of the ASEAN Framework Agreement on Services (AFAS).

A joint assessment of the score cards reviewing the progress of each ASEAN member toward the formation of the region’s single economic community shows that Indonesia achieved a total score of 82 percent last year, still below neighboring countries Malaysia and Thailand.

As envisioned by the AEC 2015 Blueprint, the community will be supported by four pillars: a single market and production base, a highly competitive economic region, a region with equitable economic development and a region fully integrated into the global economy.

The establishment of the community will continue earlier efforts made through the ASEAN Free Trade Area (AFTA) started in 1992.

Through the free trade pact, 99.11 percent of tariffs in the ASEAN-6 (Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand) have already been scrapped since 2010, while 98.86 percent
of tariffs of the ASEAN-4 (Cambodia, Laos, Myanmar and Vietnam) have been reduced to between 0 and 5 percent.

RI’s reemergence through summit diplomacy

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Early in February, President Susilo Bambang Yudhoyono will join UK Prime Minister David Cameron and Liberian President Ellen Johnson-Sirleaf in Monrovia, Liberia, in leading the third UN High-Level Panel Meeting for the Post 2015 Development Agenda discussions.

The discussions will continue in Bali in March, before a report is produced for the UN Secretary General in May, to serve as a basis for a new development agenda. Following the meeting in Africa, the President is expected to join the Organization of Islamic Cooperation (OIC) Summit in Cairo to address the needs of the Ummah.

Later in 2013, he will join G20 leaders in St Petersburg to discuss economic inclusiveness and development at the premier forum for international economic cooperation.

At the regional level, Indonesia will host Asia-Pacific Economic Cooperation (APEC) in Bali, where leaders of the Asia Pacific will be encouraged to promote deeper and more inclusive cooperation to continue its role as the engine of world economic growth.

Also in 2013, Indonesia will continue its active role at the ASEAN Summit in Brunei Darussalam, in preparation for the ASEAN Economic Community in 2015, as well as a peace dialogue at the East Asia Summit (EAS).

Of course there are other events like the Bali Democracy forum and state visits where leaders hold tête–à–tête meetings not only to enhance bilateral relations, but to also address international issues.

In 2011 and 2012, Indonesia summitry was just as active: Chairing ASEAN in 2011, facilitating dialogue for Thai-Cambodian border disputes, voicing Timor Leste’s ASEAN membership, convincing the US
of Myanmar’s democratic process and finalizing the guidelines of the  Declaration of Conduct (DoC) for South China Sea (SCS) discourse at the EAS.

In 2012, Indonesia facilitated dialogue regarding the Muslims Rohingya case; the ASEAN six point principle for the SCS and a three point solution for Syria at the D8 Summit.

All of these activities indicate the trust and expectation of world leaders and the international community toward Indonesia’s role in fostering peace, justice and prosperity. A trust based not only on Indonesian diplomacy, but also President Yudhoyono’s chemistry with other world leaders.

The players have indeed changed since the summits began to proliferate after 1945. And although some international relations analysts suggest its effectiveness had waned by 2000 (due to meeting fatigue, lower risks of regional wars, higher costs and the demand for greater grassroots benefits), the global environment continues to change for the worst, both economically and in terms of security.

The Euro crisis and the stagnant US economy (still) have made affect the world economy; pockets of tension in East Asia and the continuing political dynamics in North Africa and the Middle East has led world leaders to a deadlock when producing solutions.

New emerging countries since the G20 Summit in 2008 have been tasked with new responsibilities, taking away the dominance of G7/8 forums. Indonesia, along with China, India, Brazil and South Africa are those new players at the global level. With business meetings at the sidelines of meetings, Summit diplomacy is now also quite attractive for private sector.

For Indonesia, this is a big leap after all it has been through since 1998. Back then Indonesia’s economy collapsed, there were the May riots in Jakarta and violence in Sambas and Timor Leste colored the international media and the minds of other world leaders and observers.

Today however, after the hard work by all Indonesians, the country is viewed by the world with greater esteem, after producing a peace deal in Aceh, reconciling with Timor Leste and its active role in the G20, ASEAN, APEC and EAS. Other factors such as a thriving democracy, the fourth largest population, a growing middle class, 6 percent economic growth and a US$36 trillion expected market growth for the next five years means the country is quite attractive.

Of course this doesn’t mean all problems are solved. As a developing country, Indonesia still suffers daunting development challenges and the recurring challenge of managing 250 million people from various ethnicities, spread over islands with test-case regional autonomy governance.

Although these challenges are real, the world still looks to Indonesia to address international problems, such as plotting a new global development agenda, preserving regional stability in Asia and especially producing a solution for Palestine.

With many new world leaders arising in Greater East Asia, some leaders are returning to the West and are some retiring, it is encouraging to see that Indonesia’s leadership has ensured its own reemergence in the history books of international affairs.

Whether we believe it or not, Indonesia is now one of those countries expected to bridge dialogue between leaders in the new Asia Pacific century.

That is one of Indonesia’s leadership legacies we can all be proud to admit to and call our own.
The writer is an assistant to presidential special staff. The views expressed are personal.

Wednesday, January 30, 2013


Are we losing more islands after Sipadan-Ligitan dispute?

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On Jan. 19, okezone.com reported that Indonesia’s Semakau Island had been claimed by Singapore. In Indonesia, news about island claims, sovereignty issues and international disputes easily attract more attention compared to other matters. Such issues are sexy content for the media to play with.

In response to that, the governor of Kepulauan Riau, HM Sani sent a letter to Foreign Minister Marty Natalegawa, for clarification. The Ministry of Foreign Affairs clarified that there was more than one island called Semakau and the one in question was in fact Singapore’s.

The issue came about because Semakau Island was depicted on an official Singaporean map, apparently the governor thought that the island depicted on the Singaporean map was Indonesia’s.

It is now clear that was not the case. Ramadhan Pohan, deputy chairman of the House of Representatives’ Foreign Affairs Commission I, also clarified the issue by providing comprehensive data obtained from both Indonesia and Singapore (JPPN.com, Jan. 22).

This case reminds us of another similar case in 2005 regarding Berhala Island.

It was found that Malaysia promoted Berhala Island as a tourist destination and some parties in Indonesia thought that the one promoted was Indonesia’s. In fact there are several islands called Berhala and the one promoted was Malaysia’s.

Lesson learned: Indonesia, Malaysia and Singapore are similar in many aspects, so it is not uncommon to have similarities even island names.

Now, enough with Semakau and Berhala: The most important question is “are we really losing more islands?” Is it really true that the case of Pulau Sipadan and Ligitan, which Indonesia lost in 2002, can happen to other islands?

The case of Sipadan and Ligitan is always cited whenever cases concerning sovereignty over islands are raised. Indonesia, with thousands of islands, is likely to face similar issues concerning island claims and even sovereignty disputes in the future. How are we required to anticipate these potential issues in the future?

First and foremost, it is important for us, citizens, and especially government officials, to know the geographic configuration of our country as well as other neighboring countries. It certainly is not nice to panic or to be confused about such a serious thing as sovereignty just because we do not know that other country shares island names.

Second, it is important to understand that the sovereignty of an island that has been officially part of one country’s territory cannot be taken over easily by other country through effective occupation.

The case of Sipadan and Ligitan is completely different. Malaysia won the case for the reason effective occupation because those islands were ownerless (terra nullius) when they were disputed by Indonesia and Malaysia.

Many people misunderstood, thinking that the two islands were once Indonesia’s and then taken over by Malaysia.

It was not the case. Indonesia and Malaysia claimed the islands and they did not manage to settle the dispute through negotiation so they brought the case before the International Court of Justice. The court then decided the case based on a principle called “effectivités” or effective occupation. It confirmed that Malaysia and its predecessor, Great Britain, had done a lot to the ownerless islands compared to Indonesia and its predecessor, the Netherlands, had done.

As a senior government official once said and I agree, Indonesia did not lose any islands it just failed to add two more. This might sound like a joke but the statement explains the situation nearly perfectly.

Third, it is important to take care of small islands — especially the outer ones. For an archipelagic country like Indonesia, those small outer islands are essential in defining baselines, the imaginary lines from which maritime areas are measured. It is worth noting that taking care of those islands should not be motivated by a phobic reason: Not to lose them.

We take care of small islands not because we are afraid that other countries will take them away from us but for the prosperity of people residing on or around the islands.

Sending a lot of people from the capital to hold a flag-raising ceremony on a small island might be a good idea but we should not forget that people residing in the island need more than just a-few-hours of happiness on Independence Day.

A flag-raising ceremony can certainly boost the spirit of nationalism but it will not solve the problems they are facing: Education, health, transportation, to name a few.

Fourth, it is a good idea to have a general understanding of cartography, how maps depict territory of countries. It is important to understand that the inclusion of an island belonging to country A in a national map of country B does not necessarily mean a sovereignty claim by country B. A complete Indonesian map, for example, may also show Singapore and other neighboring countries.

The use of color, tone, intensity and legend in particular will tell what a map really means by showing an object of territory.

So, are we losing more islands? As much as we should take care of small islands, we are not doing it merely to prevent other countries from claiming them.

We are doing it for more practical reason: Prosperity. So no, we are not losing more islands.

The writer is a lecturer at the department of geodetic engineering, Gadjah Mada University. He is currently an Alison Sudradjat Award Scholar for research fellowship at the Australian National Center for Ocean Resources and Security, University of Wollongong. The views expressed are his own

Monday, January 28, 2013


‘Wawasan nusantara’ vs UNCLOS

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Wawasan nusantara is the fundamental standpoint of Indonesian geopolitics. Literally, wawasan nusantara means the archipelagic concept; contextually the term is more precisely translated as the “Indonesian archipelagic vision”. Wawasan nusantara is a way for Indonesia to look at itself (geographically) as a unity of ideology, politics, economy, sociocultural, security and defense issues.

The concept attempts to overcome Indonesia inherent geographic challenges —a state that comprises of thousands of islands as well as thousands of sociocultural backgrounds. Vis-à-vis the state craving unification, the water between the islands must become the connectors rather than separators.

Under the previous International Sea Law, the coastal state territorial water was only 3 miles seaward of its coastline. Accordingly, Indonesia archipelago encloses many high seas within, for instance: The water between Jawa and Kalimantan (the Java Sea), between Kalimantan and Sulawesi (the Makassar Strait), the Banda Sea or many other places wider than 6 miles. Even with the latter recommendation of a 12-mile seaward territorial water, Indonesia would still have several high seas within its archipelago.

Thus, wawasan nusantara is the inevitability in uniting Indonesia’s diversity.

The concept, conveyed in the Djuanda Declaration, has become the principal teaching for all Indonesians, as early as kindergarten.

Djuanda asserted that the water areas within an islanded state
must be treated as its internal water. This means that the state will have complete jurisdiction — equal to its land territory.

Thus, in the legal terms expressed in the wawasan nusantara, Indonesia practically demands full sovereignty over its territory, both the land and water. Any foreign interest lies within should become the government of Indonesia discretion only. Unfortunately, it is not the case.

When the third United Nations Convention on the Law of the Sea (UNCLOS) of 1982 came into force, it had accommodated the island states under its provisions. Under Part IV, it even specifies those states with the name: Archipelagic states.

The UNCLOS provisions define an archipelagic state as a state that comprises “one or more archipelagos and may include other islands”. In addition, the comparison between the land area and water is 1 to 1 and 1 to 9 with only 3 percent of the connecting baselines (the archipelagic baselines), that may exceed 100 nautical miles (nm) — at maximum of 125 nm.

Fulfilling those requirements, a state may claim the 12 nm of territorial sea, the 200 nm of exclusive economic zone (EEZ), including the continental shelf from its archipelagic baselines.

Under the third UNCLOS, Indonesia now has a globally accepted framework that can accommodate its ideal of wawasan nusantara.

Indonesia can claim itself as an archipelagic state. It has 2:3 ratio between land and water, around 17,000 islands and has only 18 long baselines that exceed 100 nm or
2.7 percent out of 183 baselines in total — the longest is 122.74 nm, which is also less than regulated limit
of 125 nm.

Using the third UNCLOS delimitation for the water jurisdiction, Indonesia sovereignty and sovereign rights enclose more than 5.8 million square kilometers. This is even larger than Djuanda’s assertion since the Declaration did not include the EEZ.

If the third UNCLOS has been so openhanded in embracing the archipelagic principle in general, is it really sufficient as well as compatible to the Indonesia’s wawasan nusantara in particular?

In fact, the answer lies in the retroactive of an archipelagic state and the loose wordings that embed within the Archipelago provisions.

First, since freedom of navigation is still the main spirit of the Sea Law the existence of an archipelagic state should not be significantly affected. Any archipelagic state should provide sea routes within its archipelago. The third UNCLOS refers to such routes as the Archipelagic Sea Lane (ASL). Such routes must be as convenient as when it was not archipelagic water. Differing from innocent passage, the ASL falls under the transit passage regime that cannot be suspended.
For Indonesia’s archipelago, the ASL must accommodate the two sea traffic directions namely the west-east and the north-south. Therefore, if Indonesia only provides north-south ASLs, the west-east routes will be at the transiting ship’s own discretion referred to as “the normal routes used for navigation”.

It means that any ship can freely choose its own way when transiting through the Indonesian Archipelago beyond 12 or 24 miles of the coastlines, without any intervention from the Indonesian authority. The ASL passage is similar to the high sea regimes.

Furthermore, in the generally accepted interpretation of ASL,
the transiting ships may deviate from the axis up to 25 nm, or 10 percent of the distant between the
bordering islands.

Thus, since providing ASL is mandatory and it is almost uncontrolled like the high sea, the archipelagic water does not entirely belong to the archipelagic states.

For Indonesia, since the length of its ASL is more than 4,000 miles the routes will enclose roughly
more than 200,000 square miles. Such conditions do not represent the unification spirit of wawasan nusantara.

Another exacerbating factor is the terminology of “normal mode” that is used to regulate the ASL transit. No globally accepted definition is appropriate to describe as such. Some, who have a global interest, will presume their “normal mode” as submerging their submarines while transiting, flying their aircraft over their carriers’ ADIZ (air defense identification zone), or any other manner that they consider as their “normal mode”.

Conversely, the archipelagic states are not happy with such definition as it allows the other states moving around uncontrolled inside their “archipelagic territory”.

Yet again, the wawasan nusantara principle of unity in security
and defense will not prevail under such circumstance.

Overall, the archipelago provision under the third UNCLOS is the best deal Indonesia can get for now.
Nevertheless, it is not enough to be the final goal for the wawasan nusantara precept.

What Indonesia currently needs is not legitimacy on paper, but rather the effective control of the archipelago, particularly the ASL. Although, the effective control will not change the Indonesia rights before the law, but merely winning the status will also be useless without the capability to exploit it.

Perhaps Indonesia can learn as such from its neighbor, Singapore. In certain places, albeit Indonesia owns the sky above, still it has to ask Singapore permission to fly it over because the airspace falls under the control of the Singapore flight information region (FIR).

The writer has a master’s degree in maritime policy from the University of Wollongong, Australia, and a postgraduate diploma in strategic studies from Massey University, New Zealand.


ASEAN’s role in corporate social responsibility

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Among the three pillars that will form the ASEAN Community in 2015, the sociocultural pillar is often regarded as “less sexy” compared to the political-security or economic pillars. It was, therefore, reassuring to read the inaugural speech of the new ASEAN Secretary-General, Le Luong Minh, who said, “Our integration would be incomplete without the good work done and to be done in the social and cultural pillar.”

Certainly, the fifth “Roundtable Discussion Forum on Southeast Asian Foreign Economic Policies” found the topic of corporate social responsibility (CSR) — a topic listed in ASEAN’s Sociocultural Community Blueprint — anything but unsexy. With presentations from Maria R. Nindita Radyati (Center for Entrepreneurship, Change and the Third Sector, Trisakti University) and Asep Mulyana from the National Commission on Human Rights (Komnas HAM), the discussion covered such meaty issues as businesses and human rights, empowering communities, avoiding a dependency culture and the delicate balance of safeguarding local communities while avoiding protectionist policies that could scare off foreign investment.

One major recommendation that emerged from the discussion was the need for an integrated CSR mechanism. ASEAN itself was aware of this with its blueprint calling for the development of a model public policy on CSR or a legal instrument for reference by 2010. It is, therefore, unfortunate that three years on, CSR is still in Le Luong Minh’s “to be done” category.

In Indonesia, Komnas HAM statistics show that 1,009 of the 5,422 human rights cases it handled in the period January-November 2012 were complaints against businesses in areas such as land and labor disputes, forced evictions and environmental damage.

Only the police registered higher with 1,635 complaints. Such a trend, if applied across the 10 ASEAN member states, is worrying given that the region is fast becoming a hotbed for foreign investment by multinational companies. While this interest is undoubtedly welcome, it also poses several dangers. Noting the attention her country was attracting from investors, Myanmar’s Aung San Suu Kyi stated, “We would like [to have] investors who are sensitive to such [human rights and environmental] issues.”

However, the discussion noted the difficulties in demanding foreign companies apply CSR programs as a pre-investment requirement. It may be regarded as protectionism and an additional cost for businesses already taking a risk by investing in ASEAN.

Another difficulty was identifying which companies would be required to comply with CSR. Usually, only the extractive industries are thought to require CSR compliance but Indonesia’s Law No. 40/2007 on limited companies stipulates that all companies that have an impact on the environment comply with CSR. Arguably, since all companies make some impact on the environment, it was suggested that every company comply with CSR.

A further difficulty was the question of what constituted a CSR program. Too often in Indonesia, CSR typically consists of little more than businesses throwing money at individual beneficiaries in local communities. Instead of empowering communities, it simply creates a dependency culture, reinforcing an inferiority complex among the rural poor, and turning companies into cash-cows.

Given the aforementioned difficulties, it becomes clear why ASEAN needs to develop a model public policy on CSR or a legal instrument for reference.

An ASEAN regional guideline or framework on CSR would help clear up not only the difficulties identified above but also other uncertainties surrounding CSR for the 10 ASEAN member states.

In particular, ASEAN should ensure that the implementation of CSR across the region is coherent, sustainable and coordinated. One way would be to incorporate the roundtable discussion’s call for a holistic CSR approach.

A holistic CSR would go beyond simple compliance with the law and would involve changing the philosophies, policies, strategies and standard operating procedures of a company. A holistic CSR would ensure CSR no longer stood for corporate social responsibility but “citizen social responsibility” so that every individual employee played a role, not just the business as a whole.

Greater emphasis within ASEAN should also be placed on developing community enterprises rather than individual beneficiaries. This would not only increase a community’s well-being, prosperity and cohesion but also bring immense benefits for businesses.

To demonstrate, one aspect of developing a community enterprise would be the promotion of community ownership that builds a community’s dignity. This would go some way toward addressing the dependency culture among the impoverished, thereby benefiting businesses that would no longer have to serve as cash-cows for them.

So, as ASEAN Secretary-General Minh starts his term in office and deals with a myriad of challenges facing the region, he and ASEAN would be mindful not to ignore their own words: “Our integration would be incomplete without the good work done and to be done in the social and cultural pillar.”

The writer works at The Habibie Center in Jakarta. The “Roundtable Discussion Forum on Southeast Asian Foreign Economic Policies” is coorganized with the Trade Knowledge Network (TKN) Southeast Asia, International Institute for Sustainable Development (IISD), Oxfam International and the Indonesian Chamber of Commerce and Industry (Kadin).

Indonesia’s APEC agenda, WTO nomination get wide support

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A number of countries have thrown their support behind the agenda Indonesia wants to achieve during the Asia-Pacific Economic Cooperation (APEC) summit in Bali later this year.

They also gave a positive response to the announcement of the nomination of Indonesia’s former trade minister, Mari Elka Pangestu, as the new head of the World Trade Organization (WTO).

Trade Minister Gita Wirjawan said senior officials from many APEC members had expressed support during a business luncheon hosted by the Indonesian delegation on the sidelines of the World Economic Forum (WEF) gathering in Davos, Switzerland on Friday.

Gita said on Saturday that APEC members did not only support the summit’s main agenda — the improvement of connectivity between member countries, the implementation of growth with equity and the enhancement of the Bogor free trade agreement — they also supported Indonesia’s plan to further expand the list of environmental goods that receive tariff reductions of up to 5 percent.

At the Bali summit, Indonesia is to propose the inclusion of crude palm oil (CPO) and rubber on the list so that the country’s two main commodities could take the advantage of the tariff cut, he said.

Gita acknowledged  that representatives from  some developed countries attending the business luncheon opposed the expansion of the list before member countries were able to fully implement the green good deal, achieved during the summit meeting in  Russia in September last year.

“But many support Indonesia’s proposals, although a decision has not yet been formally approved,” he said.

Gita said as the host of the APEC summit, Indonesia deserved support from other members regarding the inclusion of its two main commodities on to the list of the green goods.

“The list covers as many as 54 products. However, Indonesia has nothing,” he added.

During the meeting in Vladivostok, Russia, APEC’s trade ministers agreed on 54 green products that would have tariffs slashed to five percent or less by 2015, including wind turbine blades and solar batteries.

During the meeting, Indonesia proposed the inclusion of CPO but it was rejected on the grounds that the country’s CPO production is not conducted through a sustainable approach.

The APEC summit will be held in Bali in October this year, 19 years after the first summit was held in Bogor, West Java. The theme of this year’s gathering will be “Towards Resilience and Growth: Reshaping Priorities for Global Economy”.

Gita, who led the Indonesian delegation to the WEF’s annual gathering, was selected to be on the panel at the meeting. He also met counterparts from several countries on the sideline of the Davos meeting to discuss bilateral cooperation and the latest world economy developments.

Regarding the nomination of his predecessor Mari, currently tourism and creative economy minister, as a candidate to replace director general of the WTO Pascal Lamy, Gita said that he fully supported her nomination and had begun to approach countries in support of her election.

Gita said during meetings on the sideline of the WEF gathering, several trade ministers from other countries expressed their support for the nomination of Mari.

Many countries backed Mari’s nomination because her track record evinces efforts toward the establishment of level playing fields in international trade activities.

Monday, January 21, 2013


The UN’s legacy in Timor Leste

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The euphoria of the Christmas and New Year period has settled in Timor Leste as the country enters a new era. Having celebrated different historical moments in its history throughout the year, Timor Leste bid farewell to 2012 and in doing so made history.

The beginning of the New Year marked the end of a 13-year United Nations engagement to assist the construction of a new state. Timor Leste is now entering into a “new relationship” with the world body.

The last UN mission, the United Nations Integrated Mission in Timor Leste (UNMIT) was established with UN Security Council Resolution 1704 in late August 2006 and was mandated, inter alia, to consolidate national stability, restore and maintain public security through the provision of support to the Timorese National Police force and complete investigations into outstanding cases of serious human rights violations in 1999.

By the time peacekeeping operations ended in 2005, Timor Leste was hailed as a UN success story. When violence broke out in the nation’s capital, Dili, in 2006, the UN was eager for that success story not to be spoilt.

The Security Council promptly established UNMIT and authorized the deployment of a UN Police (UNPOL) force, which at its peak numbered 1,600 personnel.

Having probably heeded advice from long time New York resident and former president of Timor Leste Jose Ramos Horta, that an Asian food restaurant in downtown Manhattan would take years before it made a profit, the UN was now here for as long as it took, to deal with criticism leveled against it that its early departure was a contributing factor to the 2006 violence.

Throughout the 13 years, the UN success story of Timor Leste has also been a darling of the international media. With the UN pull-out and major conflict escalations elsewhere, international media attention on the country now looks certain to fade.

As the partnership takes a new shape, scrutiny will now focus on the work done and tasks that remain incomplete. While the UN peacekeeping mission departs, development agencies will stay behind to continue providing support in social and economic development.

It was always certain that the UN would not stay forever. What was unclear, however, was where to draw the departure line.

At the close of UNMIT, almost everyone involved in the process, Timorese and internationals alike, were convinced that Timor Leste was now ready to stand alone.

The peaceful and smooth conduct of three rounds of elections in 2012 with minimal UN support, and the prevalence of peace following the Feb. 11, 2008 assassination attempt on the then president Horta’s life are proof for this claim.

The Supplementary Policing Agreement signed on Dec. 1, 2006 between the Timor Leste government and the UN established that UNPOL was the holder of executive policing authority in the country, thus overseeing the National Police of Timor Leste (PNTL).

However, the UNPOL-PNTL partnership was ambiguous. Despite the terms of the Supplementary Policing Agreement, the reality on the ground spoke of different facts.

Up to the date of their withdrawal, UN police officers were barely deployed beyond the district centers on permanent basis.

In the subdistricts and villages where the majority of Timorese live, PNTL officers were the sole security providers.

Confusion arose within the community as well as the police force in regards to the dualism of command in the police force. In 2008 for instance, two consecutive orders of suspension by the UNPOL commissioner against the interim PNTL district commander of Baucau were overturned by PNTL’s national leadership. This confusion was attributed to a lack of socialization both on the side of UNMIT and the Timorese government.

Nevertheless, the presence of a UNPOL force and its support for the PNTL has largely been effective in quelling and deterring violence throughout the country. When UNMIT left at the end of 2012, it was hailed as another success, the credit for which goes to the Timorese people, their leaders and the international community alike. But was this a victorious departure?

At the last commemoration of the renowned Santa Cruz Massacre of Nov. 12, before UNMIT’s departure in 2012, the National Alliance for an International Tribunal called on the UN not to abandon its duty to bring justice to the victims of past human rights violations.

On the other hand, both Prime Minister Xanana Gusmao and former president Jose Ramos Horta have publicly and pragmatically asserted they will not call for an international tribunal on Timor Leste.

They have also questioned why the UN did not do more to pursue justice when the organization held administrative power in the country during the years of transition.

It is clear that to leave or even push the government of Timor Leste to take the responsibility for pursuing justice for past human rights violations is unfair, as it is an impossible task in the foreseeable future, given the geopolitical, economic and strategic interests at stake.

What is also clear is the fact that calls for accountability for past human rights violations will continue to haunt the UN record in Timor Leste and bilateral relations with Indonesia.

As democracy flourishes in both Timor Leste and Indonesia, voices demanding justice for past human rights violations look set to get louder in both countries.

With the competition for the presidency intensifying ahead of the 2014 general election in Indonesia and the involvement of some of the most prominent former Indonesian Military (TNI) generals in past human rights violations, media attention is likely to increase. The question of justice will return to the spotlight and UN report card on Timor Leste will be re-scrutinized.

Until Timor Leste and Indonesia muster enough power to confront and address their pasts, justice will, to quote the late, former Indonesian foreign minister Ali Alatas, continue to be a “pebble in the shoe” of the UN, Timor Leste and Indonesia. Before then, any declaration of “mission accomplished” seems to be wanting.

Edio Guterres is a former UNMIT officer. Ivo Mateus Goncalves is an historical researcher based in Dili.

Thursday, January 10, 2013


Indonesia as a new pole of global growth

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Paper Edition | Page: 7
China’s growth pattern is changing as it moves up the income ladder. The nation is likely to rely more on consumption and less on investment and exports, and more on services and less on industry. This offers opportunities for emerging East Asian economies, notably Indonesia.

Indonesia could tap these opportunities, they encompasses unique potency of the so-called 3Ds: durable macroeconomics, domestic consumption and demographic dividends.

First, Indonesia is supported by durable macroeconomic indicators, as evinced by economic growth of 5.4 percent on average between 2000 and 2012. Despite the ongoing global economic crisis, Indonesia’s annual economic growth rates stood at 6.5 percent and 6.3 percent in 2011 and 2012, respectively.

This is coupled with improved consumer confidence and less dependence on debt. After recorded a low of 93 in the third quarter of 2008, consumer confidence increased to 111 in the third quarter of 2012; and after the 1997 Asian financial crisis, Indonesia — the most affected country — exerted great effort to manage its debt. Its ratio of debt to gross domestic product (GDP) decreased from 90 percent in 2000 to about 25 percent in 2010.

Second, the Indonesian economy is largely supported by domestic consumption. The global economic outlook continues to deteriorate and financial markets continue to be volatile. Yet, Indonesia has been relatively less exposed to the world market, with its domestic market accounting for an average of 67 percent of GDP between 2000 and 2011, keeping the nation strong.

Third, Indonesia’s population is around 240 million and had a per-capita income of more than US$3,500 in 2011 as well as a growing middle-income class. This is coupled with the facts that 50 percent of population is in the labor force and that real wage growth in the nation has been lower than that of China since 2005. These factors have combined to make Indonesia one of the most promising investment destinations for the coming decade.

At the same time, Indonesia still faces three challenges to tap these opportunities: credit, competition and confronting inequality.

First, businesses, particularly domestic small and medium enterprises (SMEs) still have difficulty accessing finance. Indonesia has a relatively higher spread of lending rates minus deposit rates, with an average of 5.4 percent between 2005 and 2010, as compared to only 4.8 percent in the Philippines, 4.1 percent in Thailand, 3.5 percent in Vietnam and 3.3 percent in China.

Moreover, based on the 2009 Enterprise Survey, 48 percent firms in Indonesia said that access to finance was the biggest obstacle facing business, claiming that the proportion of their investment financed by banks was only 6 percent.

Second, learning from World Bank’s studies on Indonesian manufacturing and ASEAN investment integration, Indonesia still faces challenges in managing competition and facilitating innovation.

Indonesia was still relatively closed to foreign investment compared to peer countries in the region, which can be perceived as barriers to competition and innovation. Foreign equity caps in several sectors were relatively lower than the average for ASEAN and East Asia and Pacific (EAP) countries, including in agriculture, forestry, manufacturing and most of the service sector.

Third, Indonesia faces challenges in confronting inequality. It is true that the number of people living in poverty has been cut by half in the last decade in EAP. Poverty continues to fall, with the number of people living on less than $2 a day expected to decrease by 24 million in 2012.

Rising inequality, however, has been seen in developing economies, including Indonesia. Recent strikes pushing for better payment and treatment by Foxconn workers in China and by public servants in Brazil may occur in Indonesia in the near future. Rising inequalities can create social unrest, with consequences for overall economic growth and development.

In the short-term, government policy should focus, on lowering the cost of finance and improving access to finance. One quick-win could be providing incentives to good debtors in the form of competitive lending rates by improving information-sharing on their debt and credit history.

This should be accompanied by improvements in efficiency in the financial sector to reduce operating costs and thus provide competitive rates. At the same time, access to finance could be improved by providing temporary assistance for productive start-ups and improving the intermediation role of financial institutions.

Second, the government must improve the competition environment to enable innovation. The further opening of the economy to foreign investors should be pursued on a most-favored nation basis. More open countries tend generate more FDI flows. However, increased openness should be accompanied by improving labor quality, including incentivizing on-the-job training, designing labor quality certifications to ensure labor quality and promoting an apprenticeship system.

Last is confronting inequality. It is appropriate to ask if it might be better to have a bigger cake with unevenly divided slices or a smaller cake cut into equal but tiny pieces in the early stages of development.

An increase in inequality, measured by the skill premium, which is defined as the ratio of skilled to unskilled labor wages, could be an incentive for individuals to receive more education or to improve their skills. Policy should focus on how to encourage individuals to become more educated and more skilled, yet at the same time leaving the unskilled better off.

In the medium-term, investment should be more focused on higher value-added industries and more innovation-intensive activities. Indonesia should adopt a dual-track management in managing resource-based commodities while promoting the growth of high value added sectors. To do this, Indonesia must tap its large pool of labor and abundant natural resources, while progressively moving up the value chain in the manufacturing and services sectors.

The writer is an economist at the Economic Research Institute for ASEAN and East Asia (ERIA) and a lecturer at University of Indonesia. The views expressed are her own.

Wednesday, January 9, 2013


ASEAN ‘Magna Carta’ universalizes human rights

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Paper Edition | Page: 6
On Nov. 18, 2012, the ASEAN Human Rights Declaration was signed by the 10 ASEAN heads of state.

This Asian “Magna Carta” is a slender document of 40 articles that begins with a preamble followed by six sections on general principles, civil and political rights, economic, social and cultural rights, development, peace and international cooperation in the promotion and protection of human rights.

Nothing like it has ever been adopted by any country or by any other bloc with legal personality within the region.

What does this landmark declaration symbolize? “The Asian values debate” and the specter of cultural relativism, which arrived with rage in the 1990s, have now finally been laid to rest.

Does this also mean, however, the demise of “Asian” values? What is certain is that the rights and principles that have been enshrined in the Declaration reveal the political will of ASEAN to level the playing field in international politics.

Between January and September 2012, the 10 representatives of the ASEAN Intergovernmental Commission on Human Rights braved 10 tough meetings in seven different cities around Southeast Asia and gave the human rights project its autochthonous shape: Not least, are novel and delicate notions on the right to peace and development and a clarion call for sovereign respect and equality in international cooperation.

One iconic feature of this regional Declaration, however, and what I believe is its greatest contribution, is ASEAN’s imprimatur on the universality of the international human rights regime.

The longest and thorniest debates during the negotiations revolved around the word “regional particularities”.

It was a joust between adopting the same and exact paragraph in the Vienna Declaration and Program of Action in 1993, from which the phrase originates, drafting a modified version that would alter the paragraph except the word, or removing the word “particularities” in an absolute and final way.

The result was a new article: “All human rights are universal, indivisible, interdependent and interrelated.

All human rights and fundamental freedoms in this Declaration must be treated in a fair and equal manner, on the same footing and with the same emphasis.

At the same time, the realization of human rights must be considered in the regional and national context bearing in mind different political, economic, legal, social, cultural, historical and religious backgrounds” (article 7).

“Particularities” was purged, putting on record the ASEAN consensus for an effective end to pretexts for selectivity, including partiality and forms of discrimination or double standards not only among member state, but also between them and detractors in the West who would use rights talk in the service of self-interest.

It was agreed that article 7 must never be interpreted as diminishing the universality of human rights or in a manner that would undermine the principles protected in the Declaration.

The provision also maintains the respect for the rich sociocultural diversities of the member states and their national traditions.

It serves to remind the international community to be sensitive to the specific needs and desires of national constituencies — but to be critical and steadfast against local practices that violate human dignity.

It is unfortunate that in the past, understandings of “backgrounds” tended to emphasize national over regional contexts. Notions of “particularities” have thus to this day, inadvertently, been on the basis of national differences rather than on shared regional practices.

The Phnom Penh statement by the heads of state on the adoption of the Declaration explicitly states that the implementation of human rights must be “in accordance to the Charter of the United Nations, the Universal Declaration of Human Rights, the Vienna Declaration and Program of Action, and other international human rights instruments to which ASEAN Member States are parties, as well as to relevant ASEAN declarations and instruments pertaining to human rights” lest the Declaration lends itself to the tangential interpretations of cultural relativists or would be authoritarians.

These deliberations manifest the exceptional ideal of ASEAN regional solidarity in full action. The organization has been criticized from within and outside for the lack of an effective voting system.

But the spirit of compromise and consensus played out consistently — and quite painfully — throughout the entire drafting process and especially in the negotiation of article 7. Notwithstanding hard and intractable positions, the representatives invoked the ground rule to drop any issue when one or more states were in absolute disagreement. It was the double-edged sword.

Between the benefits of avoiding neighborly conflict or those of an agreement, the preeminent principle for political expediency held sway: One for all — and all for one.

Furthermore, in consonance with ASEAN informality, the representatives also convened a series of what they call “retreats” in the course of the negotiations. ASEAN officials, ministers and bureaucrats alike use this unique regional custom when they agree that protocol must give way to straight and intimate talk between peers.

The retreat environment is relaxed, familial and unceremonious.

They were exercised with care and restraint by the framers, who were ultimately responsible for every word in the Declaration, in order to negotiate away from the public eye, combining first the requirements of confidentiality (not secrecy), and last but not insignificantly, the ubiquitous value of saving face in Southeast Asian ethos.

Such ideals and values are unique to ASEAN, but they lean undeniably on the principles of the modern state system in large measure. Indeed, we can choose to be cynical and look only at the staying power of the state and how often it falters in providing for the welfare of the individual rights and freedoms of women and men.

But we can also choose to look differently at this Declaration: One small step for ASEAN but one giant leap for humanity. The reverse is no less true: One small step for humanity, one giant leap for ASEAN. It is no small wonder that we now all stand to benefit either way.

The writer was member of the Philippine delegation under Ambassador Rosario Manalo to the ASEAN Intergovernmental Commission on Human Rights for the drafting of the ASEAN Human Rights Declaration. He is a university research scholar in politics and international studies and East Asian studies at the University of Leeds (UK).