Bloomberg News

Indonesia WTO Nominee Brings Crisis Lessons to Spur Doha Talks

February 24, 2013

Indonesia’s Candidate as WTO Head Mari Pangestu

Mari Pangestu, Indonesia's trade minister, is competing against candidates from Brazil, Ghana, Costa Rica, Jordan, South Korea, Mexico, New Zealand and Kenya. She’s one of three women seeking to replace Pascal Lamy as director general of the World Trade Organization. Photographer: David Paul Morris/Bloomberg

Mari Pangestu, Indonesia’s candidate to succeed Pascal Lamy as head of the World Trade Organization, said her experience helping the country recover from the 1998 financial crisis may help revive the Doha Round of trade talks.

Trade has led to growth, development and reduced poverty in Indonesia, transforming the nation after the crisis, said Mari Pangestu, who was the country’s trade minister for seven years until being named tourism and creative economy minister in 2011.

“The experience means not only do I understand the challenges that developing countries face when they are in the process of opening up, but also how to manage these challenges,” Pangestu, 56, said in an e-mailed response to questions yesterday.

The WTO’s next leader will face completing the Doha negotiations, which Pangestu said will boost global growth amid an uneven U.S. expansion, a recession in the euro area and slowing growth in China. The talks, which began in 2001, have made little headway as member nations bicker over agriculture subsidies and industrial tariffs.

“A multilateral trading system has to be inclusive,” Pangestu, who witnessed the riots at the 1999 WTO conference in Seattle where she spoke as a representative of a non-government organization, said in an interview in her office in Jakarta Feb. 15. “That means to bring along the lesser and least developed countries so that they can benefit from the greater market access.”

The organization needs a face-lift to make it relevant in the 21st century, Amina Mohamed, deputy head of the United Nations Environment Programme and Kenya’s candidate for the trade arbiter’s top post, said Jan. 17.

Other Candidates

Pangestu is competing against candidates from Brazil, Ghana, Costa Rica, Jordan, South Korea, Mexico, New Zealand and Kenya. She’s one of three women seeking to replace Lamy. The Geneva-based WTO has had only one head from a developing country since it was created in 1995 and no women have ever vied for the job before.

Indonesia’s economy shrank 13 percent during the 1998 financial crisis. The country took a $43 billion bailout from the International Monetary Fund as its currency slumped, companies defaulted on debt and more than 80 banks failed, were nationalized or recapitalized.

Rising exports led by commodities such as palm oil and coal and domestic spending have helped Southeast Asia’s biggest economy post one of the fastest economic growths among the G-20 countries. Exports almost tripled in the seven years Pangestu was trade minister, data compiled by Bloomberg show.

“I breathe, live and experience trade,” Pangestu said.

‘Be Consistent’

“You’ve got to be consistent in doing your reforms,” said Pangestu, who joined the government the same year as former Finance Minister Sri Mulyani Indrawati, now a managing director at the World Bank. “When we were put in government, we like to think that we succeeded in achieving a number of reforms, which I think laid the foundation for growth as well for consolidating democracy.”

Economic growth in the world’s third-most populous democracy after India and the U.S. was 6.11 percent in the three months through December, holding above 6 percent for nine quarters as gains in domestic consumption countered a decline in exports.

The nation’s exports fell 9.8 percent last year amid a slowing global economy. In September, the WTO cut its forecast for 2013 global trade growth to 4.5 percent from 5.6 percent. Sentiment against a multilateral trading system has become more dominant than that in favor of it, Pangestu said.

“We need to do a better job of explaining the benefits of trade,” she said. “Addressing these challenges is going to be one of the priorities. And that would involve obviously a different way of looking at the world and better outreach.”

Government Adviser

Before becoming trade minister in 2004, Pangestu advised the government on financial sector liberalization in the late 1980s. She worked as a researcher and then executive director for the Centre for Strategic and International Studies in Jakarta. She was a consultant to the World Bank, the Asian Development Bank and a task force coordinator on poverty and development for the United Nations Millennium Project, according to her curriculum vitae.

Indonesia will play host to the WTO’s ninth ministerial conference in December in Bali. Member countries need to agree on topics related to trade facilitation, agriculture and developing countries by the middle of the year to reach a deal in Bali, Director-General Lamy said Jan. 26.

The Doha talks have so far resulted in a balanced package, meaning there’s something for everyone, and the challenge now lies in completing the “last mile,” Pangestu said. The WTO chief must know when the opportunity comes up to find that consensus and common ground, she said.

Building Bridges

“You have to be seen as an honest broker, building bridges and being able to bridge the interest of a large range of countries with very diverse positions and diverse levels of development,” Pangestu said, recalling her favorite phrase by the late Indonesian economist Mohammad Sadli describing the nation’s struggle for reforms: “We always muddle through, but as long as we’re moving forward we should be optimistic.”

To contact the reporter on this story: Berni Moestafa in Jakarta at bmoestafa@bloomberg.net

To contact the editor responsible for this story: Colin Keatinge at ckeatinge@bloomberg.net


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