12 June 2024 - Technical Assistance II

The Directorate General of International Trade Negotiation at the Ministry of Trade, in collaboration with ARISE+ Indonesia, has recently developed and introduced the Trade in Services (TiS) Coordination Mechanism. This framework is aimed at enhancing the coordination between Indonesia’s trade negotiators, the private sector, and line ministries, drawing on international best practices and stakeholder consultations.

The development of this Coordination Mechanism comes at a time when the service sector's role in Indonesia's economy has become increasingly significant. Its contribution to the Gross Domestic Product has risen from 33.4% in 2000 to 42.8% in 2021, and its share in employment has also shown considerable growth. This highlights the essential need for Indonesia’s trade negotiation team to be well-versed in the evolving trends of both domestic and international service economies.

Given the complexity and scope of international trade negotiations, particularly in services, Indonesia has recognized the importance of a robust institutional framework. This framework is crucial for understanding the nuances of both foreign and domestic regulatory environments and ensuring effective coordination among stakeholders. It also facilitates the integration of private sector insights, which are vital for developing informed negotiation stances.

The journey to develop this framework began with a strategic mapping exercise to identify relevant agencies and line ministries involved in trade in services. This was followed by a pivotal workshop held on 29 November 2023 in Bandung, where stakeholders discussed capacity concerns and potential institutional arrangements. Insights from this workshop were pivotal in shaping the design of the institutional framework, taking into account unique national needs and international best practices.

The development of this mechanism was led by the ARISE+ Indonesia team of experts from International Economic Consulting, under the leadership of Paul Baker. The mechanism was presented at a workshop in Bandung on 6 May 2024 to a diverse group of trade negotiators, analysts, and representatives from the private sector.

The workshop was officially opened by Rizalu Akbar, the Director of Trade in Services Negotiations, who emphasized the importance of the new framework. He stated, "We hope that by having such an effective coordination mechanism, we can enhance the quality of our negotiating outcomes for the benefit of the private sector."

Peter Wijaya, Vice Chairman of Industry at the Indonesian Employers Association West Java Branch, highlighted the importance of legal standing for the newly proposed Trade in Services Committee. "With clear legal standing, the committee’s recommendations can significantly influence government policy, offering tangible solutions for the business sector," he explained.

Wahyu Ardana, a trade negotiator from the Directorate of Trade in Services, expressed his hope that the coordination mechanism could be implemented swiftly. "This mechanism will allow us to receive immediate stakeholder input, resolve outstanding negotiation issues, and bring benefits to Indonesia's trade in services sector," he noted.

He also highlighted several challenges that would need attention, including the need for consistent human resource capacity among the negotiation team and technical ministries, and ensuring a comprehensive understanding among all stakeholders involved in service trade negotiations.

The development of the TiS Coordination Mechanism marks a strategic advancement for Indonesia in handling the complexities of service trade negotiations. By aligning the interests of the government, private sector, and technical ministries, Indonesia is poised to enhance its negotiation strategies and ultimately strengthen its trade competitiveness and economic resilience.

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