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ERIA Lead Advisor Discusses Indonesia Trade Policy with Surabaya Students

3 March 2020

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Surabaya, 3 March 2020: Dr Lili Yan Ing, ERIA’s Lead Advisor for Southeast Asia, attended two discussions with hundreds of undergraduate and graduate students from Universitas Airlangga and Universitas Wijaya Kusuma, two leading universities in Surabaya, Indonesia’s second largest city, to discuss Indonesia’s trade policy amidst trade tensions.

Dr Ing began her presentation by discussing the current world trade situation and the forecast that E7 economies (China, India, Brazil, Indonesia, Mexico, Russia, and Turkey) will be double the size of G7 economies (Canada, France, Germany, Italy, Japan, UK, USA) by 2050. She then explained about Indonesia’s position in the world, particularly in Asia as the fifth out of the seven gainers in the share of manufacturing value added to the world.

Afterwards, she discussed Indonesia’s composition of exports and imports, the various trade agreements that Indonesia is a part of such as Indonesia-Japan EPA, ASEAN-India FTA, ASEAN-Korea FTA, AANZFTA, and many more. In closing, she shared some information regarding the Intra-ASEAN Trade.

Dr Ing’s fellow panellist was Prof Wing Thye Woo, Distinguished Professor of Economics at University of California in Davis and Research Professor at Sunway University in Kuala Lumpur. Prof Woo’s presentation was titled ‘Climate Change, Trade War, and now Coronavirus: How is Indonesia to do?’.

Prof Woo described the ongoing trade tensions between the US and China, the four different US perspectives on China, and how the fears and interests in China towards the US are actually very similar.

‘The better way for USA to maintain its technological edge over China is to increase state funding for basic research, improve incentives for US firms to invest in R&D, upgrade STEM [science, technology, engineering, and mathematics] education in USA at the pre-tertiary level, and attract global talents,’ said Prof Woo, adding that ‘delaying technological innovation in China will lower overall technological progress because of cross-border fertilization of tech-progress.’

According to Prof Woo, Indonesia can push for a ‘sensible’ rules of engagement. ‘Durable peace can be achieved only if China and the US can keep economic/technological competition and geo-strategic competition separate. While some policy instruments are used in both types of competition, China and US should fight the trade war only with instruments that mainly hurt the economy of the other country and not change the geo-strategic balance significantly,’ he said.

He suggested that Indonesia can play a role in helping ‘revise [the] global governance architecture to suit the international new normal’, marked by exiting the era of global hegemon and entering the age of Anthropocene.

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