Enhancing Market Openness in Indonesia. Molly Lesher, OECD Trade and Agriculture Directorate

Transcription

1 Enhancing Market Openness in Indonesia Molly Lesher, OECD Trade and Agriculture Directorate OECD Regulatory Reform Review of Indonesia, First Working Group Meeting 9 February 2011

2 Outline of Presentation What is regulatory reform and market openness? OECD Efficient Regulation Principles for Market Openness Why bother applying the principles to Indonesia? Next steps for working together to improve market openness in Indonesia OECD Trade & Agriculture 2

3 What is Market Openness? Market Openness refers to the minimisation or elimination of distorting border and behind-the-border barriers to trade and investment. Market openness policies: Aim to help countries to reap benefits of globalisation and international competition by minimising distortions from border and behind-the-border measures; and Influence opportunities open to foreign suppliers of goods and services to compete with domestic suppliers in national market (e.g. through trade and investment). OECD Trade & Agriculture 3

4 How are domestic regulations important for international market openness? Domestic regulations can facilitate or restrict the free flow of goods and services and of investment. Efficient regulations bring benefits for domestic and foreign enterprises by: creating conditions for easy access to new markets; helping to maintain profitable economic activities ; and by keeping regulatory costs low and providing a secure and efficient business environment. OECD Trade & Agriculture 4

5 Regulatory Reform: Government Tool to Enhance Market Openness Governments can improve existing regulations and create new regulations that are non-discriminatory and efficient by Improving regulatory institutions and methods that are used to produce, review, and implement regulations; Reducing burdens on enterprises including their trading activities, contributing to better economic performance and an increase in trade and investment flows; Making trade no more restrictive than necessary; and Achieving regulatory objectives while minimising the barriers to trade and investment. OECD Trade & Agriculture 5

6 The OECD Efficient Regulation Principles for Market Openness 1. Transparency and openness of decision making 2. Non-discrimination 3. Avoid unnecessary trade restrictiveness 4. Use of internationally harmonised measures 5. Streamlining conformity assessment procedures 6. Application of competition principles OECD Trade & Agriculture 6

7 Transparency and openness of decision-making The transparency and openness of regulatory decision-making is a fundamental factor facilitating participation in a market. There are three aspects: Access to information about regulations and procedures; The openness of the rule-making process to stakeholders through public consultations; and Effective access to appeals procedures. OECD Trade & Agriculture 7

8 Non-discrimination Regulations that are nondiscriminatory provide for better competitive opportunities between like products and services irrespective of their origin, and therefore increase market access. The principle of non-discrimination involves: National treatment (i.e. equivalent treatment to national as well as foreign suppliers); and Most-favoured-nation (MFN) treatment (i.e. no difference in treatment among foreign producers). In most countries commitment to these principles flows from WTO membership, so that respect for both is broadly ensured through adherence to international trade obligations. OECD Trade & Agriculture 8

9 Avoidance of unnecessary trade restrictiveness Market openness can be achieved if regulatory measures are more restrictive for trade and investment than is necessary. Unnecessary restrictions on trade may be reduced if regulators examine the trade effects of proposed and existing regulations. Governments most commonly employ the following tools and mechanisms to ensure that regulations effectively avoid unnecessary trade restrictiveness: Use of performance based regulations and consideration of regulatory alternatives; Regulatory impact analyses; Administrative simplification; and Trade facilitation. OECD Trade & Agriculture 9

10 Use of internationally harmonised measures Domestic regulatory frameworks reflect individual national characteristics and policy objectives that often result in different regulatory arrangements. Unnecessary costs from regulatory diversity can appear when regulatory solutions do not serve any clear public interest, or when they are designed in order to fit the strengths and peculiarities of the domestic industry. Unnecessary costs associated with regulatory diversity can be reduced by favouring the use of internationally harmonized measures. OECD Trade & Agriculture 10

11 Streamlining conformity assessment procedures Conformity assessment procedures may facilitate trade or create a technical barrier to trade. Procedures can cause duplicative costs for firms when different markets require the repetition of essentially identical tests against the same or equivalent standards. Recognising the equivalence of the results of an assessment performed elsewhere can greatly contribute to reducing trade costs. Conformity assessment that is streamlined and well implemented can save time and money, support larger scale production and economies of scale, and simplify purchasing, thus reducing costs for companies. OECD Trade & Agriculture 11

12 Application of competition principles Anticompetitive practices of private firms can present difficulties for the efficient functioning of international markets. These activities can restrict market access by seriously undermining the efforts of firms to enter new markets. For this reason, a commitment to sound competition principles is crucial in providing the appropriate conditions for genuine market openness. OECD Trade & Agriculture 12

13 Why bother applying the six market openness principles to Indonesia? GDP growth (percent change from previous period) Indonesia Southeast Asia Exports of goods and services (share of GDP) Indonesia Southeast Asia FDI flows (as a share of GFCF) FDI stocks (as a share of GDP) Indonesia Southeast Asia OECD Trade & Agriculture 13

14 Can past experiences with trade and investment reform improve market openness in Indonesia? How do regional and multilateral efforts contribute to (or hinder) market openness in Indonesia? Did the experience with the harmonisation of customs procedures in ASEAN (1997) lead to additional knock-on regulatory changes in Indonesia? Did the experience aligning domestic standards with relevant international standards within APEC (2005) prompt new regulatory changes or changes to the way in which regulations are created in Indonesia? What steps are being taken to implement the proposed ASEAN Economic Community (AEC) by 2015? OECD Trade & Agriculture 14

15 The Business Environment, 2010 Ease of Doing Business Rank Starting a Business Dealing with Construction Permits Registering Property Getting Credit Protecting Investors Paying Taxes Trading Across Borders Enforcing Contracts Closing a Business A Singapore Thailand Malaysia Vietnam ASEAN average Brunei Darussalam Indonesia Cambodia Philippines Laos Myanmar n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a Korea Japan China ASEAN+3 average OECD Trade & Agriculture 15

16 How to improve the business environment in Indonesia? What do you see as the most important improvements that could be made to the business environment? How has the investment policy package introduced in 2007 affected investment in Indonesia? What steps have been taken since then to improve the investment environment? Has the experience with one-stop-shops for business licensing been successful and extended to all subregions? Has simplification of the licensing structure also taken place? OECD Trade & Agriculture 16

17 Global Competitiveness Index, 2010 Overall Index Infrastructure component Brunei Darussalam Cambodia Indonesia Laos n/a n/a Malaysia Myanmar n/a n/a Philippines Singapore 3 5 Thailand Vietnam China OECD Trade & Agriculture 17

18 How can market openness principles help improve competitiveness in infrastructure? In your view, what are the major infrastructurerelated obstacles to market openness in Indonesia? Has the single window initiative been successful in rationalising port costs and congestion? Do interregional transport barriers represent a significant impediment to market openness? How are levies monitored, particularly in remote areas? OECD Trade & Agriculture 18

19 Working together to improve market openness in Indonesia The OECD wants to work with you to help improve market openness in Indonesia. At the same time, OECD Members will be able to learn from Indonesia s experiences reforming trade and investment policy regimes. OECD Trade & Agriculture 19

20 OECD Trade and Agriculture Terima kasih! Contact OECD Trade & Agriculture 20