Since gaining independence in 1945, Indonesia’s government has pursued a harmful policy of food self-sufficiency that imposes severe import restrictions, tariffs, price controls, monopolies by state-owned enterprises, and barriers to entry—all in the name of independence. These laws increase the cost of food, resulting in widespread malnutrition among Indonesia’s low-income population. Those protectionist trade policies have led to significant food insecurity across Indonesia: 26 million people lack the income to buy adequate food and an additional 68 million Indonesians are considered extremely vulnerable to food price increases.
To turn the tide, the Center for Indonesian Policy Studies (CIPS) launched the Affordable Food for the Poor initiative in 2016, focusing its efforts on making nutritious food both widely available and affordable. The team wrote dozens of policy papers calling for an end to trade barriers and the food self-sufficiency agenda. As one of the very few prominent voices calling for liberalized trade, CIPS’ research and advocacy has gradually influenced mainstream thinking in Indonesia with more than 1,600 media mentions and 20 op-eds in top-tier Indonesian outlets. Government officials began rolling back their protectionist propaganda when the public opinion started to shift.
"There could not be a stronger international endorsement of our work than being named a finalist of the prestigious Templeton Freedom Award,” said Rainer Heufers, founder and executive director of CIPS. “Our colleagues cheered when we received the good news and we feel inspired to continue our efforts for the freedom and prosperity of Indonesians."
CIPS’ primary campaign is called Hak MakMur, which means “The Right to Eat Affordably” in Indonesian and, if read as an acronym, also “the Right to Prosper.” As the name implies, the project focused primarily on the ways liberalized food trade benefits low-income populations in Indonesia. It also sought to persuade President Joko Widodo—who won his first term (2014–19) in part due to his firm protectionist beliefs—to abandon the food self-sufficiency agenda and turn instead to open markets to achieve food security.
Hak MakMur set out arguments in favor of unfettered trade through policy papers on topics including: domestic farmers’ income, reforms to reduce food prices through trade in rice, beef, sugar, corn, and poultry, and effects of trade restrictions on malnutrition and stunted growth among a third of all Indonesian five-year-olds. CIPS built a coalition of 11 organizations, including think tanks, nutrition groups, local businesses in the food sector, networks of traditional market sellers, and student groups. It leveraged YouTube influencers to create entertaining and informative videos on the topic: one video drove a 400 percent increase in signatures for the campaign’s online petition demanding free and open trade.
CIPS also published a Monthly Food Price Index to show prices of staple foods in comparison to their prices in neighboring countries; it highlighted how much money consumers would save if they were able to shop in neighboring countries, and demonstrated how trade barriers cause Indonesia’s comparably high food prices. CIPS presented the index in easy-to-read and easily shareable infographics that were useful for media and government officials. According to the CIPS team, translating rigorous research into digestible products has been critically important to their success.
When President Widodo launched his re-election campaign in early 2018, he ordered two million tons of rice to be imported, acknowledging that the lack of imports had driven up the cost of food in Indonesia. The President then dropped the protectionist position from his reelection campaign and it was not included in the official government agenda for his second term (2019–24).
Dropping food self-sufficiency from the government agenda was an unprecedented step, and CIPS was the only entity openly and publicly advocating for it. A Director General within the Trade Ministry has even asked for CIPS’ policy papers to be made into briefs for the minister to help craft a trade-oriented agenda. The campaign has contributed to the reduction of import restrictions in beef, corn, rice, and other food products, resulting in an estimated food cost savings of US$1.9 billion for Indonesian households between 2016 and 2019.
Finally, an omnibus bill featuring elements of CIPS policy recommendations is expected in September 2020, which would further liberalize the food trade by revising the protectionist imperative of the Food Law from 2012. The significant reform would allow for imports without caveats. Currently, the law only allows imports if domestic supply of a food product is inadequate. The omnibus bill is also expected to amend Article 12 of Law No. 25/2007, which bans foreign direct investment in a range of economic sectors. If passed, foreign direct investment would be encouraged—rather than prevented—in a variety of sectors, including the food market.
The paradigm shift in attitude toward trade and imports is especially evident in the government’s response to public pressure during the COVID-19 pandemic, with the CIPS policy recommendations being ready and available to be implemented. For example, in response to the latest food shortage in early 2020, when garlic and brown onion prices jumped due to self-imposed trade barriers, the Ministry of Trade temporarily dropped the associated import requirements in line with CIPS’ recommendations.
"Living in a country like the United States, it can be easy to forget that the bad trade policy we consider merely inconvenient at home is often catastrophic elsewhere in the world,” said Casey Pifer, Atlas Network’s director of institute relations. “For decades, Indonesian citizens have endured the end results of protectionism in the food sector: increased food prices, frequent food shortages, and food insecurity for millions. Center for Indonesian Policy Studies' relentless, years-long campaign to open food trade in the country has already saved Indonesian households billions of dollars in food costs, providing greater access to nutritious meals for poor families, and laying the intellectual groundwork for Indonesia's food security in the coming years."
When CIPS first sought to open up Indonesia’s trading borders in 2016, they were a lone voice with a very unpopular view. Decades of propaganda and nationalism have caused the nation to prioritize food self-sufficiency over food sustainability. CIPS was able to display, through empirical evidence, that this outlook has resulted in damaging policy that has most negatively impacted the poor. In a span of four years, the perspective of international trade has completely flipped, and legislation is beginning to show a new national outlook.
Center for Indonesian Policy Studies is a finalist for the 2020 Templeton Freedom Award.
About Atlas Network’s 2020 Templeton Freedom Award:
Awarded annually since 2004, Atlas Network’s Templeton Freedom Award is named for the late investor and philanthropist Sir John Templeton. This prestigious prize honors Sir John’s legacy by recognizing Atlas Network’s partner organizations for exceptional and innovative contributions to the understanding of free enterprise and the advancement of public policies that encourage prosperity, innovation, and human fulfillment. The Templeton Freedom Award is generously supported by Templeton Religion Trust and will be presented during Atlas Network’s Freedom Dinner on Nov. 12. The winning organization will receive a $100,000 prize, and five additional finalists will receive $20,000 prizes. The finalists for the 2020 Templeton Freedom Award are:
- The Center for Indonesian Policy Studies, based in Jakarta, Indonesia, for their Affordable Food for the Poor project
- The Centre for Public Policy Research, based in Kochi, India, for their labor market liberalization project
- The Fraser Institute, based in Vancouver, Canada, for their Alberta Prosperity Initiative
- IDEAS Labs, based in San José, Costa Rica, for their “Ticos Con Coronas” campaign
- The Mercatus Center at George Mason University, based in Arlington, Va., for their Equity Initiative for American Healthcare
- The Property and Environment Research Center, based in Bozeman, Mont., for their Recovering Endangered Species project
The Templeton Freedom Award is generously sponsored by Templeton Religion Trust.
