Jakarta’s zero tariff move to lift Palestinian imports

The agreement took six years to negotiate. (Shutterstock)
Updated 08 March 2019
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Jakarta’s zero tariff move to lift Palestinian imports

  • Waiver is step toward major trade deal, minister says 

JAKARTA: The Indonesian market could be a testing ground for Palestinian exports’ competitiveness following the introduction of a zero tariff policy.

An agreement with Indonesia on import tariff waivers for Palestinian products came into effect in mid-February after 2.5 years since the idea was floated by members of a Palestinian trade delegation attending an international trade expo in Jakarta in Oct 2016.

The initial waiver will apply to fresh and dried dates, and virgin olive oil. Palestine has asked for about 20 export products to be included in the policy.

Tariffs previously were set at 5 percent.

Djatmiko Bris Witjaksono, director of foreign trade analysis and trade center at the Ministry of Trade, said the agreement offers preferential treatment for Palestinian imports, but it will be up to the business community to show its willingness to buy the products.

“Palestine may have to compete with similar products imported from other countries. If the supply and product continuity is reliable, importers will eventually buy from them,” he told Arab News.

“The tariff exemption is significant and should be reflected in the products’ pricing in the market. Eventually it will boost the competitiveness of Palestinian products in Indonesia.” Witjaksono said.

Shinta Widjaja Kamdani, vice chairwoman of international relations at the Indonesian Chamber of Commerce and Industry, said the zero tariff policy will boost trade between the two countries.

“Now we have to look at the market opportunity to identify the goods from Indonesia we can export and vice versa. It looks like there is a market there for our food and beverage products,” she said.

Trade Minister Enggartiasto Lukita said the elimination of Indonesian tariffs on Palestinian dates and olive oil began on Feb. 21, when Indonesia’s Foreign Ministry sent a diplomatic note to Palestine.

Zuhair Al-Shun, Palestine’s ambassador to Indonesia, was also told about the tariff move in a meeting with Indonesian Vice President Jusuf Kalla on Feb. 28.

“We hope we will be able to enjoy Palestinian dates in the upcoming Ramadan,” Lukita said.

Both countries are considering expanding the policy to create a preferential trading agreement, the trade minister said.

Al-Shun said Palestine has provided a list of products to be considered for preferential treatment by Indonesia.

“The list is being reviewed by the Indonesian government. We also welcome Indonesian products that will be exported to Palestine,” Al-Shun said.

Lukita said the trade agreement is part of Indonesia’s unwavering support for Palestine.

Trade between Indonesia and Palestine was worth $3.5 million in 2018. Indonesian exports to Palestine include coffee, tea, bread and other foodstuffs, while dates and olive oil make up the bulk of its imports.

The zero tariff policy is expected to boost date imports by 11.62 percent within a year.
 


Foreign investors hope India dials back policy shocks after Modi win

Updated 58 min 22 sec ago
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Foreign investors hope India dials back policy shocks after Modi win

  • Modi’s pro-business image and India’s youthful population have lured foreign investors
  • After Modi’s win, about a dozen officials of foreign companies in India and their advisers said they hoped he would ease his stance and dilute some of the policies

NEW DELHI: Foreign companies in India have welcomed Prime Minister Narendra Modi’s election victory for the political stability it brings, but now they need to see him soften a protectionist stance adopted in the past year.
Modi’s pro-business image and India’s youthful population have lured foreign investors, with US firms such as Amazon.com , Walmart and Mastercard committing billions of dollars in investments and ramping up hiring.
India is also the biggest market by users for firms such as Facebook Inc, and its subsidiary, WhatsApp.
But from around 2017, critics say, the Hindu nationalist leader took a harder, protectionist line on sectors such as e-commerce and technology, crafting some policies that appeared to aim at whipping up patriotic fervor ahead of elections.

Opinion

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“I hope he’s now back to wooing businesses,” said Prasanto Roy, a technology policy analyst based in New Delhi, who advises global tech firms.
“Global firms remain deeply concerned about the lack of policy stability or predictability, this has sent a worrying message to global investors.”
India stuck to its policies despite protests and aggressive lobbying by the United States government, US-India trade bodies and companies themselves.
Small hurdles
Modi was set to hold talks on Friday to form a new cabinet after election panel data showed his Bharatiya Janata Party had won 302 of the 542 seats at stake and was leading in one more, up from the 282 it won in 2014.
After Modi’s win, about a dozen officials of foreign companies in India and their advisers told Reuters they hoped he would ease his stance and dilute some of the policies.
Other investors hope the government will avoid sudden policy changes on investment and regulation that catch them off guard and prove very costly, urging instead industry-wide consultation that permits time to prepare.
Protectionism concerns “are small hurdles you have to go through,” however, said Prem Watsa, the chairman of Canadian diversified investment firm Fairfax Financial, which has investments of $5 billion in India.
“There will be more business-friendly policies and more private enterprise coming into India,” he told Reuters in an interview.
Tech, healthcare and beyond
Among the firms looking for more friendly steps are global payments companies that had benefited since 2016 from Modi’s push for electronic payments instead of cash.
Last year, however, firms such as Mastercard and Visa were asked to store more of their data in India, to allow “unfettered supervisory access,” a change that prompted WhatsApp to delay plans for a payments service.
Modi’s government has also drafted a law to clamp similar stringent data norms on the entire sector.
But abrupt changes to rules on foreign investment in e-commerce stoked alarm at firms such as Amazon, which saw India operations disrupted briefly in February, and Walmart, just months after it invested $16 billion in India’s Flipkart.
Policy changes also hurt foreign players in the $5-billion medical device industry, such as Abbott Laboratories, Boston Scientific and Johnson & Johnson, following 2017 price caps on products such as heart stents and knee implants.
Modi’s government said the move aimed to help poor patients and curb profiteering, but the US government and lobby groups said it harmed innovation, profits and investment plans.
“If foreign companies see their future in this country on a long-term basis...they will have to look at the interests of the people,” Ashwani MaHajjan, an official of a nationalist group that pushed for some of the measures, told Reuters.
That view was echoed this week by two policymakers who said government policies will focus on strengthening India’s own companies, while providing foreign players with adequate opportunities for growth.
Such comments worry foreign executives who fear Modi is not about to change his protectionist stance in a hurry, with one offical of a US tech firm saying, “I’d rather be more worried than be optimistic.”