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US, Indonesia seek to cut trade barriers

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April 21, 2017

US Vice President Mike Pence says the US will work with Indonesia to reduce trade barriers.

Indonesia and the United States have agreed to find ways to reduce barriers to US companies operating in Southeast Asia's largest economy, visiting US Vice President Mike Pence and Jakarta's investment chief say.

The Trump administration has put Indonesia on a list of 16 countries whose trade surpluses with the US will be put under review. A series of disputes between Indonesia and American firms has also ruffled ties.

"We will work with President Jokowi to reduce barriers to trade and investments and to create a truly level playing field where all our businesses have equal opportunity and market access," Pence said. Jokowi is the nickname of Indonesia's President Joko Widodo.

"The president and I spoke about that very candidly and very respectfully," Pence told a roundtable discussion with business executives in Jakarta before flying to Australia on the last leg of his 10-day Asia-Pacific tour.

Indonesia's investments barriers include a lack of intellectual property protection, insufficient transparency with regulations and requiring local content for manufactured goods sold in the Indonesian market, Pence said.

Indonesia's Investment Coordinating Board chief Tom Lembong said Widodo agreed "we still have too many regulations, too many barriers to trade, and these are bad for local and international industries".

Lembong said Indonesia needs both investment and imports from the US, "especially productivity-enhancing products and services. You need imports to boost exports".

Neither side disclosed any discussions about the disputes Indonesia has had with American companies of late.

Over the past six months, Indonesia has wrestled with mining giant Freeport McMoRan, demanding the company divest 51 per cent of its shares in its Papua-based gold and copper mine, and has demanded that Google Inc settle unpaid taxes and fines of more than $US400 million ($A531 million). Jakarta also scrubbed JP Morgan from its list of primary bond dealers after what was deemed a negative research report.

Pence did, however, witness the signing of more than $US10 billion in memoranda of understanding with US companies in Indonesia on Friday.

Among the 11 agreements were ones by Exxon Mobil to sell liquefied natural gas to Pertamina, Lockheed Martin to provide upgrades to the Indonesian Air Force's F-16s, and General Electric to develop electrical infrastructure in Indonesia.

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