The Structure of Protection in Indonesian Manufacturing Sector

This paper aims to analyse structure of protections in Indonesian manufacturing sector. Firstly, it describes the evolution of Indonesian industrial and trade policies. To some extent, Indonesian industrial and trade policies follow a statement of the supporters of liberalization: “good times mean bad policies and bad times mean good policies”. Secondly, effective rate of protection analysis shows that Indonesian manufacturing sector has been liberalized more, especially after the 1997 economic crisis. The liberalization in manufacturing sector has also been encouraged by international/regional commitments such as the WTO, IMF, ASEAN Free Trade Agreement and other preferential trade agreements. Thirdly, Indonesian trade liberalization in the manufacturing sector was faster than that of Thailand and could catch up with Malaysian trade liberalization.