November 12, 2020 Print

Indonesia: Open to the World

The Center for Indonesian Policy Studies has won Atlas Network’s 2020 Templeton Freedom Award for their work to remove harmful trade barriers in Indonesia's food sector, liberating billions of dollars in international commerce and potentially transforming the country’s protectionist outlook on trade. The award, which carries a prize of $100,000 and is generously sponsored by Templeton Religion Trust, was presented at Atlas Network’s virtual Freedom Dinner on November 12.

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 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 rhetoric when the public opinion started to shift. 

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.

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.

Most recently, the Indonesian parliament passed into law the single largest set of policy reforms since Indonesian democracy began two decades ago. 

“They plan to open Indonesia’s food trade and increase the role of the private sector in raising agricultural productivity,” explained Rainer Heufers, executive director at CIPS. Previously, Indonesian laws only allowed imports when domestic supplies were insufficient; under the new law, the government has dropped import restrictions as a strategy to support farmers, penalties on imported commodities and arbitrary weight limits have been removed, and citizens are free to import livestock.

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."

In 2016, CIPS took on the herculean task of liberalizing one of the most protectionist trade barriers in the world; four years later and not only have policymakers’ outlook on trade changed, reform has made goods cheaper and more readily available. “Lifting import restrictions gives market access for much cheaper international commodities,” continued Heufers. “They have been suffering from excessive domestic prices even before they were the worst affected by the global Covid-19 crisis. They will now be able to access more nutritional food at affordable prices.”

Atlas Network is proud to name Center for Indonesian Policy Studies the winner of 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 Templeton Freedom Award is generously sponsored by Templeton Religion Trust.

For media inquiries about the 2020 Templeton Freedom Award, contact AJ Skiera at Aj.Skiera@AtlasNetwork.org or (224)636-3227.