When Mr Cameron went to Jakarta

What the outcome of Cameron's Indonesian tour means for relationships between London and Jakarta

Earlier this month, many of us were among the Indonesian business community which welcomed British Prime Minister David Cameron to Jakarta, where he expressed his clear desire for closer trading links between our countries.

This week, Indonesia’s trade minister, Gita Wirjawan, will arrive in Europe to press the case for more trade with all member states of the European Union. As part of Indonesia’s forestry business sector, with over $9bn in exports annually, we wholeheartedly support the initiatives from both Cameron and Wirjawan.

For European companies, Indonesia represents a substantial and growing opportunity at a time of deep economic crisis. Indonesia is the largest economy in South East Asia, with a GDP in excess of $1trn. Annual GDP growth reached 6.5 per cent at the end of 2011. We have a thriving consumer economy which offers great prospects for everyone from smart phone makers to automotive brands and plane manufacturers. During Cameron’s trip to Jakarta, Garuda Indonesia, Indonesia’s national airline, announced an order of 11 new planes from Airbus, bringing much needed work for the UK aviation industry.

For Indonesia, Europe continues to be a significant market for our exporters. In Indonesia’s forestry sector, Europe accounts for 15 per cent of Indonesia’s timber product exports, a figure we would like to grow in the years ahead.

In order to achieve that, we understand European businesses and consumers need cast-iron assurances that their wood products do not come at the expense of the environment. Indonesia contains many of the world’s most precious natural resources and biodiversity. Indonesia’s rainforests are home to some of most endangered species on the planet, such as the Sumatran Tiger, and are critical in the fight against climate change.

Indonesia, including the forestry sector, has recognised that deforestation is no longer an acceptable option for our country, our partners, and the environment. That’s why Indonesia’s President, Susilo Bambang Yudhoyono, made a strong commitment last year to protecting Indonesia’s rainforests and reducing the country’s greenhouse gas emissions by 26 per cent over the rest of this decade.

In the forestry sector, we have seen the very positive and practical results of these commitments, with the introduction of a new certification system for Indonesia’s timber sector, called "SVLK".

SVLK, which comes into force next year, will provide the assurance to European and other customers that Indonesia’s wood products are produced in a legal and sustainable manner. Two months ago, all the major trade associations representing the forestry sector in Indonesia, gathered in Jakarta to work out the practical steps required to achieve world-class timber production and trade standards through SVLK. We are now very firmly on that path, which will ultimately cover every part of the wood product sector in Indonesia. It is a huge undertaking – but a vital one.

The timing of SVLK is very important for our European stakeholders. When the EU Timber Regulation comes into force in March 2013 it will require all European importers of timber to have done a high level of due diligence on the wood products they buy. By providing a simple and clear standard, SVLK licensing will make this much easier and provide a very high level of reassurance for those sourcing timber products in Indonesia.

We urge the European Commission, European Member States and the Indonesian government to promote awareness of the SVLK in Europe and what it will mean for those who wish to trade in wood products with Indonesia. With these world-class standards in place, Indonesia’s forestry sector will be able to participate in the growing trade opportunities between our country and the EU – without sacrificing precious environmental values.

Finally, we would also like to call for constructive engagement with European NGOs who have taken such a strong interest in the protection of Indonesia’s natural resources over the years. The new SVLK system is something they should support and welcome. Indonesia’s forestry sector wants to work with them to help make it a success.

We hope that the initiatives by Cameron and Wirjawan mark the beginning of a new era of trade between Indonesia and EU nations. There are huge gains to be made by both sides if our economic ties can become stronger.

Illegally logged trees are floated downstream in Indonesia. Photograph: Getty Images

Purwadi Soeprihanto is the executive director of the Association of Indonesian Forest Concessionaires.

Photo: Getty
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Theresa May's U-Turn may have just traded one problem for another

The problems of the policy have been moved, not eradicated. 

That didn’t take long. Theresa May has U-Turned on her plan to make people personally liable for the costs of social care until they have just £100,000 worth of assets, including property, left.

As the average home is valued at £317,000, in practice, that meant that most property owners would have to remortgage their house in order to pay for the cost of their social care. That upwards of 75 per cent of baby boomers – the largest group in the UK, both in terms of raw numbers and their higher tendency to vote – own their homes made the proposal politically toxic.

(The political pain is more acute when you remember that, on the whole, the properties owned by the elderly are worth more than those owned by the young. Why? Because most first-time buyers purchase small flats and most retirees are in large family homes.)

The proposal would have meant that while people who in old age fall foul of long-term degenerative illnesses like Alzheimers would in practice face an inheritance tax threshold of £100,000, people who die suddenly would face one of £1m, ten times higher than that paid by those requiring longer-term care. Small wonder the proposal was swiftly dubbed a “dementia tax”.

The Conservatives are now proposing “an absolute limit on the amount people have to pay for their care costs”. The actual amount is TBD, and will be the subject of a consultation should the Tories win the election. May went further, laying out the following guarantees:

“We are proposing the right funding model for social care.  We will make sure nobody has to sell their family home to pay for care.  We will make sure there’s an absolute limit on what people need to pay. And you will never have to go below £100,000 of your savings, so you will always have something to pass on to your family.”

There are a couple of problems here. The proposed policy already had a cap of sorts –on the amount you were allowed to have left over from meeting your own care costs, ie, under £100,000. Although the system – effectively an inheritance tax by lottery – displeased practically everyone and spooked elderly voters, it was at least progressive, in that the lottery was paid by people with assets above £100,000.

Under the new proposal, the lottery remains in place – if you die quickly or don’t require expensive social care, you get to keep all your assets, large or small – but the losers are the poorest pensioners. (Put simply, if there is a cap on costs at £25,000, then people with assets below that in value will see them swallowed up, but people with assets above that value will have them protected.)  That is compounded still further if home-owners are allowed to retain their homes.

So it’s still a dementia tax – it’s just a regressive dementia tax.

It also means that the Conservatives have traded going into the election’s final weeks facing accusations that they will force people to sell their own homes for going into the election facing questions over what a “reasonable” cap on care costs is, and you don’t have to be very imaginative to see how that could cause them trouble.

They’ve U-Turned alright, but they may simply have swerved away from one collision into another.  

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.

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