Abstract:
A long-standing goal of self-sufficiency has strongly influenced Indonesia’s agricultural trade policy. Beginning from the famine experienced by the country in the aftermath of colonisation, the resulting protectionist stance has been a persistent theme in Indonesia’s agricultural trade policy until today. Its role as economic shock absorber has ensured the continuing importance of the agricultural sector. Until recently, the sector had the highest employment share in the economy. As the sixth largest exporter of agricultural products in the world, Indonesia’s has produced agricultural commodities that are highly valued in world markets. However, the protectionist stance developed to support the self-sufficiency objective has made agriculture the most inefficient sector in the country. With the introduction of the Food Law of 2012, the self-sufficiency objective became even more institutionalised. The Law is the foundation for the many regulations that deal with the agricultural trade policy, which is designed to allow imports only when domestic production is insufficient. The agricultural trade policy derived from the Law utilises NTMs as the main instrument for heavy restriction of imports, and applies export taxes to Indonesia’s main agricultural export. After reviewing the historical evolution of Indonesia’s agricultural trade policy, and summarising the role of agriculture in today’s Indonesian economy, the thesis critically examines the current agricultural trade policy framework in Indonesia. The thesis then describes and analyses the impact and policy implications of trade policy in Indonesia’s economy by using three case studies. The case studies of rice and beef are the examples chosen for analysis of policy toward imports, while the case study on crude palm oil (CPO) provides a balancing analysis of export policy.