Local Content Requirements (Promises and Pitfalls)
As anti-globalisation and geopolitical tensions rise, the use of Local Content Requirements (LCRs) worldwide has become increasingly prominent. The motivations for adopting LCRs vary, encompassing the need to ensure domestic supply, create jobs, increase value-added production, and safeguard national security.
In Indonesia, LCRs have been a significant topic of discussion within trade and investment policy circles for decades. Indonesia's engagement with LCRs began in the 1950s with the Benteng Programme, which aimed to protect and develop local businesses. Over the years, this approach has evolved through key initiatives, including the Deletion Programme (1974–1993) and the National Car Programme (1996). Following the 1997–98 Asian financial crisis, Indonesia implemented major economic reforms, embracing trade liberalisation. Nevertheless, LCRs remained a persistent policy tool, notably resurfacing in 2009 to stimulate local industries.
As a large, emerging economy and major exporter of natural resources, Indonesia's LCR policies present an important case for examining the alignment of such measures with World Trade Organization (WTO) commitments. While the intentions behind LCRs are commendable, their implications for international trade commitments are complex and warrant closer scrutiny.
To address these issues, ERIA will be hosting a webinar titled 'Local Content Requirements: Promises and Pitfalls.' This event will provide valuable insights and promote scholarly discourse on LCRs, exploring both the benefits and challenges of these policies. It will offer a platform for in-depth discussion among experts, policymakers, industry leaders, and academics.