GSP Renewed, Pompeo Talks Tough on China, AmCham Meets Ambassador Kim, Minimum Wage Going Up
Nov 03, 2020 | AmCham Indonesia
GSP Facility Extended for Indonesia
The Indonesian government has welcomed the extension of the Generalized System of Preferences (GSP) for tariffs and trade facilities granted to Indonesia, which was officially determined by the US government through the Office of the United States Trade Representative.
Due to a trade surplus with the United States, Indonesia’s eligibility for the program has been under review since 2018 as both countries negotiated trade policy on a range of goods and services. Both India and Thailand lost GSP privileges after a similar review.
President Joko Widodo and Foreign Minister Retno Marsudi met with US Secretary of State Mike Pompeo on Oct 29. The President articulated the importance of increasing economic cooperation between the two countries, and emphasized the importance of extending Indonesia’s place on the GSP list. GSP is a US program that provides tariff relief to countries exporting to the US market.
Indonesian Ambassador to the US, Muhammad Lutfi, said the extension of GSP shows the high confidence of the US government in improvements to domestic regulations carried out by the Indonesian government to create a more conducive business and investment climate.
“We believe this is the right decision by the US government,” said AmCham Indonesia Managing Director A Lin Neumann. “It shows progress in the bilateral relationship and should be helpful for many of our members.”
Two-way trade between the two countries was $27 billion in 2019.
Coordinating Minister for Maritime Affairs and Investment Luhut Pandjaitan said that to help boost two-way trade between Indonesia and the US, Indonesia proposed reaching a limited trade deal (LTD) agreement by 2024, which would cover trade cooperation and investment in the information, communication, and technology sectors.
US Secretary of State Mike Pompeo met with President Joko Widodo and Foreign Minister Retno Marsudi at the Presidential Palace in Bogor to discuss strengthening strategic and defense cooperation between the United States and Indonesia on Oct 29. After criticizing China’s dominant presence in the South China Sea, the US government is looking to enhance maritime security in some of the world’s busiest trade routes and help protect Indonesia’s sovereignty near the Natuna Islands and its Exclusive Economic Zone (EEZ) in the same area.
The Indonesian government does not recognize Beijing’s territorial claim called the nine-dash line, which intrudes into Indonesia’s EEZ. The government has also said there are no overlapping jurisdictions with China in the Riau Islands Province. Indonesia has repeatedly turned away Chinese coast guard and fishing vessels entering the Natuna Sea. The US has also deployed warships on multiple occasions to assert its stance on promoting a free and open Indo-Pacific region.
“Law-abiding nations reject the unlawful claims made by China in the South China Sea,” said Pompeo. He commended Indonesia’s leadership on the issue within ASEAN and the United Nations. Pompeo said the US will enhance defense cooperation by boosting military procurement, training, exercises and intelligence sharing.
Indonesia has been careful to walk a middle path between China and the US, generally avoiding tough talk.
Retno said she hoped a stable and peaceful South China Sea will be achieved and that the United Nations Convention for the Law of the Sea is respected.
However, amid rising superpower tensions, Indonesia has expressed concern over Washington’s harsh anti-China policies despite sharing a similar view on China’s territorial claims. Retno emphasized that every country needs to be part of the solution and cooperate to achieve peace, stability and prosperity.
AmCham Welcomes Sung Kim, New US Ambassador to Indonesia
AmCham Indonesia held an Impromptu discussion with major US companies and the US Ambassador to Indonesia, Sung Kim, on Oct 29. The event was held at the Ritz-Carlton Hotel, Mega Kuningan in accordance with strict COVID-19 health protocols.
Prompted by the visit of Secretary of State Michael Pompeo, who did not attend the roundtable, the discussion opened with Ambassador Kim expressing his excitement over being posted to Indonesia. Having previously been ambassador in the Philippines and South Korea, he said he was optimistic over the US-Indonesia relationship. He also said his door was open for the US business community and offered his team’s assistance in any way possible.
Companies offered a warm welcome to the Ambassador and a brief overview of Indonesia’s current investment climate, as well as how US companies can contribute in the future. Everyone agreed US investment in Indonesia can bring more benefits to the nation’s economic growth, and US companies will do their best to bring those benefits here.
AmCham Cares: 3M Indonesia
3M Indonesia is supporting Habitat for Humanity and its #BERGERAK project to help provide shelter for medical workers. 3M invited all employees to participate in #3MBERGERAK activities from Oct 1-14, 2020 to collect food donations.
“3M holds true to its core values during this pandemic by supporting our communities and improving lives,” the company said.
“Throughout this global crisis, we will continue to respond with innovative and effective ways to help in the fight against COVID-19.
“Let’s move and do good together.”
412,784 COVID-19 Cases in Indonesia
There were 2,696 new positive COVID-19 cases as of Nov 1, according to the Ministry of Health, bringing the total number of cases to 412,784, having passed the 400,000 mark on Oct 27. Seventy-four more people died, bringing the death toll to 13,943.
Jakarta recorded 608 new cases for a total of 106,205, followed by Central Java (458), East Java (253), West Java (245), West Sumatra (225) and East Kalimantan (168).
Jakarta, Central Java, and Yogyakarta Raise 2021 Minimum Wage
Jakarta, Yogyakarta, and Central Java have decided to increase the Provincial Minimum Wage. The decision was based on Government Regulation No. 78 Year 2015 concerning Wages, while the Minister of Manpower’s Circular Letter recommended that for 2021 the minimum wage should be unchanged.
For Jakarta, the2021 figure will increase to Rp 4,416,816 ($300.63). Jakarta Governor Anies Baswedan said the 3.27 percent increase had taken into account gross domestic product (GDP) and national inflation. Central Java will increase the minimum wage to Rp 1,798,979. Governor Ganjar Pranowo said the decision was based on discussions and input from wage councils, labor unions and the Indonesian Employers' Association.
Yogyakarta has increased its 2021 minimum wage to Rp 1,765,000. Chief of Yogyakarta Manpower and Transmigration Office Aria Nugrahadi said the increase took into consideration the recommendations and input from the Yogyakarta Wage Council meeting on Oct 30, which was attended by elements of the government, workers/laborers and entrepreneurs. The 3.54 percent increase was a middle ground from the companies’ suggestion of 3.33 percent and labor’s demand of 4 percent.
Minister of Manpower Ida Fauziah said 18 provinces have complied with the letter to not increase their minimum wage.
President Joko Widodo has issued Presidential Regulation No. 102 Year 2020 concerning the Implementation of Supervision by Corruption Eradication Commission (KPK) which is mandated in article 10 paragraph 2 of Law No. 19/2019 concerning the Corruption Eradication Commission.
The Presidential Regulation allows the KPK to supervise other agencies or institutions authorized to eradicate corruption, namely the National Police and the Attorney General's Office. The regulation also allows the KPK to monitor any corruption cases investigated by those institutions.
Support Independent Journalism: Subscribe to The Jakarta Post
In these difficult times, our hometown English language newspaper, The Jakarta Post, is more important than ever. Given the difficulties of physical circulation and the economic slump, the Post needs to boost its online subscribers – a goal we heartily support at AmCham Indonesia. Quality English language news is vital for our businesses, our home offices and the flow of information out of Indonesia. It is for this reason, that we are urging all of our members and readers to subscribe to JP! Information is what will help get us through this crisis. Below is information about how to sign up.
We Still Need Your Support to Shelter the Front Line
AmCham Indonesia and Habitat for Humanity have joined forces in an initiative called Sheltering Those Who Care for Us, a program to provide temporary quarters in hotels for Indonesian medical workers during the COVID-19 pandemic. Our program has helped not only medical workers in Jakarta, but also Tangerang and Surabaya; we are now planning to expand to Sulawesi.
With the COVID-19 pandemic still spreading, medical workers are working a lot harder than before. In these difficult times, they often cannot go back home for fear of infecting family members or being rejected by their local communities. As a result, they are forced to sleep in hospitals without a proper bed, also increasing the possibility of getting infected.
By donating, we will increase the overall capability of Indonesia to treat COVID-19. Habitat will match individual hospitals with hotels on an as-needed basis.
We are continuing with a full slate of meetings, events and information offered to our community online. But we can only do this through the support of our members. If you are not yet an AmCham member, please join now!
AmCham Indonesia is open to all companies with an interest in US business relations and we have many non-American members. We are a community and we welcome you!
The AmCham Office is on work from home status and all face-to-face meetings and events have been postponed. We are having a number of meetings online using the Zoom platform. You will be notified of virtual meetings as they are scheduled.
What is Your Company Doing on COVID-19?
Please let us know what measures your company may be taking in the form of donations and other assistance to help Indonesia during this time of confusion and concern. Contact [email protected] with your news. We would like to publicize the ways that our AmCham companies are pitching in.
Stay safe, call a doctor if you have a high fever, cough, or difficulty breathing. Stay healthy above all else.
COVID Update is AmCham’s regular newsletter on developments related to the pandemic crisis in Indonesia. It is edited by AmCham Managing Director A Lin Neumann and written by the AmCham Staff. Paul L Goddard is the Managing Editor