Monday, 24 February 2020 00:00

The U.S. Removes Indonesia from a Developing Country

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The United States, through its Office of the US Trade Representative at the World Trade Organization (WTO), removed China and Indonesia from the list of developing countries. Besides both countries, there are three other countries that have also been removed from the list, namely Brazil, India and South Africa. The five countries are declared as developed countries in international trade. The decision of the US Trade Representative Office requesting the World Trade Organization (WTO) to exclude Indonesia from developing country status officially came out on February 10, 2020. So, what are the pluses and minuses for Indonesia by the changing of status from a developing to a developed country? For some people, it might be considered an achievement. This means that Indonesia can be equalized with the United States or other European countries. Is that true? In terms of trade, Indonesia's rising status as a developed country has several consequences. Take for example; there is removal of the Generalize System of Preference (GSP) facilities or relief of import duties on imported goods to the United States. The GSP facilities are only given to least developed countries and developing countries. In addition, in several trade agreements, developing countries also often get technical assistance from developed countries. With the change in the status of Indonesia from a developing country to a developed country, Indonesia's privileges will naturally be lost. The United States might increase import duties on Indonesian goods to the United States. On one hand, bearing the status as a developing country is indeed profitable in terms of trade, because imported goods from developing countries to developed ones get lower import duties. This rule is intended to help these countries move out of poverty. On the other hand, Indonesia must respond wisely to this status change decision. Upgrading the status of Indonesia to a developed country might erase various facilities, especially related to trade, which has been obtained by Indonesia as a developing country. However, Indonesia must view this decision in a positive way. The ease that Indonesia has received so far, in the form of relief of import duty on goods, may have tempered Indonesia's export performance abroad. Indonesia seems to be spoiled with various facilities provided by developed countries. Changing the status of Indonesia to a developed country and the loss of various facilities as a developing country are expected to whip up Indonesia’s export in a bid to improve competitiveness and improve the quality of Indonesian products abroad. Coordinating Minister for Economic Affairs, Airlangga Hartarto said the government was not worried about the impact of the change in status. His side certainly has ways and strategies to deal with the consequences faced by Indonesia after this status change.

Read 592 times Last modified on Tuesday, 25 February 2020 15:02