STREAMLINING NON-TARIFF MEASURES ON FOOD PRODUCTS IN INDONESIA

The manufacturing sector is more affected by the pandemic than the agricultural sector. Only a few manufacturing industries had positive growth; the food and beverage industry are one of those sectors, with a 3.94% growth rate in QW-I 2020. However, the food and beverage industry still depends on imported inputs, with 70-80 percent of inputs imported, particularly for sugar, salt, milk, and flour. Non-tariff measures (NTMs) are intensively imposed on food products in Indonesia. The main objectives of NTMs imposed on imported food products are to protect consumers' health and safety, the environment, and absorb local production. The literature on NTMs shows that NTMs may have two potential effects, both positive and negative. It can improve consumer welfare by ensuring product quality and safety, but NTMs may also increase the prices of products due to the cost of compliance. The objectives of this study are to identify NTMs regulation and issuing institution of four selected food commodities (Milk, Sugar, Salt, and Wheat Flour), to identify challenges and obstacles on procedures and the cost of compliance of NTMs faced by the private sector, to identify challenges and obstacles on the design, implementation, and coordination of NTMs faced by relevant Ministry or Government Institutions, and to formulate a roadmap to streamline NTMs on food products. The study used the United Nations Conference on Trade and Development (UNCTAD) framework to review NTMs on the four food products in five strategic steps. The study identified several challenges and obstacles from the private sector FGD, including procedures and registrations, certification, labeling, and halal certification for milk commodities, import licensing, overlapping regulations, NTMs related logistic costs, and product standards (SNI) for sugar commodities, product quality and standards, availability of raw materials, and seaport restrictions for salt commodities, and upgrading the technology of testing laboratory, standards, and VAT treatment for wheat flour. The results of the Government FGD highlighted ten critical aspects of the design, coordination, and implementation of NTMs, including the purpose of NTMs, policy designs, implementation process, cost to implement NTMs, main objective of applied NTMs, relevant ministries conduct NTM dissemination, coordination between stakeholders, allocation of resources for capacity building, overlapping regulations, and NTMs related to the protection of consumer health and safety. The study recommends improving NTMs coordination among relevant ministries and institutions, harmonizing NTMs regulation with the Job Creation Law (Omnibus Law) and its derivatives, simplifying NTM procedures, increasing transparency, building capacity, facilitating business sectors, and standard harmonization. The study also recommends improving NTMs coordination among relevant ministries and institutions, harmonizing NTMs regulation with the Job Creation Law (Omnibus Law) and its derivatives, simplifying NTM procedures, increasing transparency, building capacity, facilitating business sectors, and standard harmonization.