US says talks on Indonesia trade preference to conclude soon

A worker unloads palm fruit at a palm oil plantation on Sumatra island. (Reuters)
Updated 06 November 2019

US says talks on Indonesia trade preference to conclude soon

JAKARTA: US Commerce Secretary Wilbur Ross said on Wednesday Washington’s review of a trade preference facility for Indonesia would conclude soon, and predicted “far more investment” by US companies in Southeast Asia’s biggest economy.

The Office of the United States Trade Representative (USTR) has been reviewing Indonesia’s eligibility for the Generalized System of Preferences (GSP) facility for more than a year due to concerns about market access for US goods, services and investment.

Speaking after meetings with Indonesian ministers and ahead of a meeting with President Joko Widodo, Ross said both sides had agreed to step up efforts to conclude the review.

“We are comfortable and confident that very quickly (the outstanding issues) could be resolved,” Ross told reporters in the Indonesian capital.

“I think we’ll see far more investment from American companies and far more bilateral trade than exist right now.”

The GSP program gives privileged trade status to developing economies. By retaining GSP and opening up more market access both ways, Indonesia and the US aim to more than double their trade in the next five years to $60 billion, Indonesian Chief Economic Affairs Minister Airlangga Hartarto said.

Total two-way trade was worth $28.6 billion last year, according to Indonesian Trade Ministry data.

“We want to open access for our furniture and textiles and we have programs to import more cotton and wheat from the US,” Hartarto said.

Some 80 percent of the negotiations for the GSP facility, which reduces duties on $2 billion of Indonesian exports, have been completed, he said, adding that talks should be wrapped up before Christmas.

US companies including automotive firm Tesla and conglomerate Honeywell were seeking business opportunities, and Jakarta had promised improvements in the investment climate, Hartarto said.

Crisis-hit Moroccans join ‘informal economy’ as job market shrinks

Updated 14 July 2020

Crisis-hit Moroccans join ‘informal economy’ as job market shrinks

  • More than a third of Moroccan workers are already in the informal economy
  • However, the crisis is expected to expand this informal economy as people lose their jobs

RABAT: The coronavirus crisis is expected to expand Morocco’s informal economy of people who work for cash, reducing tax revenue and leaving many without social protection, the head of the state planning agency and economists said.
More than a third of Moroccan workers are already in the informal economy, doing manual or domestic labor, driving taxis or selling in the streets, accounting for 14% of gross domestic product, according to the agency.
However, the crisis is expected to expand this informal economy as people lose their jobs in companies and consumers seek the cheaper goods and services provided by workers who are not registered with the state’s pension fund.
Morocco, with 16,047 coronavirus cases, last month allowed cafes, restaurants and other services to resume activity at half capacity except in provinces where infections remain high. Last week, it extended an emergency decree giving local authorities leeway in taking restrictive measures until Aug. 10.
Unemployment is expected to surge to a rate of 14.8% in 2020 from about 9.2% before the pandemic, the agency said.
Fatima Hamdane, 53, who lost her job as a worker at a car parts manufacturing plant in Casablanca, said she would work as a cleaner even if her employer did not pay social security duties. She has diabetes and has already skipped medical checks because of her hard financial situation.
“I knocked on many doors, but couldn’t find a job,” she said. “Most have rejected me because of my age.”
Ahmed Lahlimi, the planning agency chief, told Reuters that while the number of people moving into the informal economy was expected to grow, the agency did not have any updated figures estimating the extent of the problem.
The informal economy already costs the state 34 billion dirhams ($3.4 billion) in annual tax losses, Finance Minister Mohamed Benchaaboun said.
Morocco’s fiscal deficit stood at $2.3 billion at the end of May with revenue down and spending up because of the crisis. It is expected to widen to 7.5% of gross domestic product in 2020 from 4.1% last year while the economy is expected to shrink by 5%, according to the government’s reviewed budget.
The Confederation of Moroccan Enterprises, a business group, says the informal economy puts 2.9 million jobs at risk in formal companies by undercutting their costs. In May, it recommended offering tax incentives to make more companies register officially.
“In the past, the state has tolerated the informal economy in times of social tensions such as during the 2011 pro-democracy protests,” said Rachid Awraz, of the Moroccan Institute for Policy Analysis.
But, in the long run, it leaves workers without social protection and prey to poverty in addition to its low added value for the economy, he said.
Labour Minister Mohamed Amekraz did not answer Reuters requests for comment.