Indonesia will still host the U-20 World Cup in 2023. In the aftermath of the Kanjuruhan Stadium tragedy, Indonesia’s right to conduct the U-20 World Cup was questioned due to the possible sanctions from FIFA – the world's highest governing body of football. However, the sanctions were not discussed in the meeting between President Joko Widodo and the President of FIFA last month. Contrarily, FIFA’s President, Gianni Infantino, announced  the FIFA team’s plan to visit Indonesia as a way to enhance cooperation and collaboration in preparing the tournament. 

The U-20 World Cup is expected to bring plenty of advantages for Indonesia on its first hosting experience. These are the U-20 World Cup’s economic benefits for Indonesia.

What is the U-20 World Cup?

The World Cup is an international football competition organised by FIFA every four years. Each country gets a chance to become the host of the World Cup, which has been held regularly since 1930. FIFA also organises other international football tournaments for youth players (U-20 World Cup and U-17 World Cup), for women (U-20 Women's World Cup and U-17 Women's World Cup), for football clubs (Club World Cup), and for other types of football such as Futsal World Cup and Beach Soccer World Cup.

As one of the most popular youth tournaments, the U-20 World Cup is held biannually for national team players who are under 20 years old. So far, there have been 24 teams from 24 countries that will compete for the prestigious trophy. The 24 countries that qualify for the final stage will be drawn into six groups of four teams. Currently, Indonesia has joined five teams from Europe, four teams from North America, and two teams from Oceania.

Although the locations of city and stadium for next year's U-20 World Cup has not been determined, Indonesia has been preparing six stadiums, namely the Bung Karno Stadium in Jakarta, Si Jalak Harupat Stadium in Bandung, Manahan Stadium in Solo, Gelora Bung Tomo Stadium in Surabaya, I Wayan Dipta Gianyar Stadium in Bali, and Gelora Sriwijaya Stadium in Palembang. To support the preparations, the Indonesian government is currently renovating the stadiums’ infrastructure, especially upon the stadium grass.

The Economic Benefits of Hosting the World Cup

In general, the World Cup provides an opportunity for the host country to increase international perception. Broadcasted both by national and international media, the U-20 World Cup provides an opportunity for Indonesia to exhibit not only the grandeur and success of the tournament, but also the potential of tourism in various regions in Indonesia.

The advancement of Indonesia’s tourism sector through the U-20 World Cup is expected to bring  several multiplier effects, wherein the presence of foreign tourists as the spectator of this competition will boost the sector. This projection is based on Poland's economic growth after hosting the U-20 World Cup in May and June 2019. According to the Polish Statistics Agency, there was an increase in the number of domestic and foreign tourists as seen from the occupancy rate of hotels and similar inns. In May 2019, the number of residents was recorded at 3,280,645. This result increased by 8.9% compared to the previous year.

Besides tourism, Indonesia can take advantage from the entry of investment. The need to increase the accommodation, transportation, and infrastructure facilities for the competition can be utilised to attract and establish partnerships between domestic and foreign investors. Indonesia’s Minister of Tourism and Creative Economy Sandiaga Uno plans to massively promote Indonesian tourism through digital marketing. Apart from investing in the tourism sector, domestic and foreign investors can actively participate in various infrastructure renovation projects for the U-20 World Cup. 

The infrastructure renovations and the increasing accommodation facilities will create more jobs that will subsequently contribute to the GDP of the host country. Various international events require international infrastructure and facilities standard, with no exception the U-20 World Cup. Therefore, the tournament requires  a large number of workers to achieve the standard. Lee and Taylor (2004) reported more than 31,000 jobs created in Japan and South Korea during their collaboration in hosting the 2002 World Cup. This job creation helped create an economic impact of approximately $1.35 billion in output, with an additional $1 billion directed toward collective income and value.

Looking from the previous hosts’ pattern of experiences, Indonesia will likely receive similar economic benefits from hosting the U-20 World Cup in 2023. The national and local government are required to not only prepare the tournament, but also utilise the economic potential of the international competition for national economic development. 

The World Trade Organization (WTO)’s decision of Indonesia vis-à-vis the European Union (EU)’s dispute over the ban on nickel exports is expected to be announced soon. On November 22, 2019, the EU filed a lawsuit to the WTO regarding Indonesia’s raw nickel export ban policy which is considered detrimental to the nickel industry in the EU countries. The EU lawsuit covers five main topics, namely: (a) nickel export restrictions, including actual export bans; (b) domestic processing needs for nickel, iron ore, chromium, and coal; (c) domestic marketing obligations for nickel and coal products; (d) nickel export licensing requirements, and; (e) prohibited subsidy schemes.

Recently, the President of Indonesia Joko Widodo (Jokowi) mentioned that Indonesia will likely lose in this dispute. Despite the WTO decision, Indonesia still insists on banning nickel exports and applies similar rules to other raw commodities such as coal, bauxite, copper, and gold. "It looks like we will lose at the WTO, but it’s fine, the industry is already built," Jokowi said.

This article will discuss the nickel industry’s potential in Indonesia, the reasons behind the issuance of the nickel export ban policy, and other Indonesia’s nickel related issues. The nickel export ban policy indicates a protectionist move for the domestic nickel industry. The Indonesian government should pay attention to several risks that come with the policy. This article will comprehensively discuss these aforementioned points.

The Potential of Indonesia's Nickel Industry

Indonesia is a nickel exporting country that controlled up to 20 percent of world nickel exports before the ban was imposed two years ago. Indonesia produces 1 million metric tons per year and contributed to 37% of the world's total nickel production in 2021, which is around 2.7 million metric tons. Yet, despite the export ban, Indonesia has still been able to reap significant profit from nickel-based products exports with $20.9 billion in revenue in 2021. This value has increased dramatically, considering that the export revenue of Indonesia's nickel-based products 7 years ago was only $1 billion. Jokowi opined that Indonesia's consistency in this policy will lead Indonesia's gross domestic product (GDP) to reach $3 trillion by 2030.

Reasons for Indonesia's Export Ban

There are two main reasons behind the Indonesian nickel export ban policy: 

1. The development of smelter technology in Indonesia will likely propel domestic demand for nickel ore. Indonesia currently has 21 smelters out of the targeted 53 smelters in 2024. Domestic nickel ore demand from the increasing smelters is predicted to reach 100 million tons by 2022 and will continue to increase. Processed nickels have higher quality and price that will generate more export revenue for Indonesia compared to nickel ore. Instead of being sold abroad, the government aims to store domestic nickel ore for smelters.
2. Indonesia's nickel export ban policy aims to develop domestic downstream industries related to nickel commodities. The Indonesian government aims to attract more investment in the nickel downstream industry that is mainly related to the electric battery industry. Currently, Indonesia can only produce grade 2 nickel derivative products for stainless steel. Meanwhile, grade 1 nickel derivative products are needed for the manufacture of electric batteries. In his statement, President Jokowi wants Indonesian nickel to be upgraded to grade 1 nickel products for lithium batteries in electric vehicles. The level 1 nickel processing industry is considered lucrative for Indonesia nickel industry.

Based on these reasons, the nickel export ban policy implemented by the Indonesian government appears to be oriented towards the development of the domestic industry. The nickel processing industry, which has not acquired the resiliency to compete with other large industries, requires investment assistance and protection from the government. Protectionism policies, such as export bans, are carried out by a country to make its new industries reach economies of scale and sufficient capability to compete internationally

In a broader context, Indonesia's unchanging commitment is based on Indonesia's vision to shift its role from an exporter of raw materials to a producer of processed nickel with high economic value. This attitude is emphasised by Jokowi's statement, where "Indonesia always exports raw materials, while it is better to process and consume them through downstream industries or domestically". The export value of nickel ore is currently around $30 per tonne, whereas that value may increase to $100 per tonne if converted into ferronickel – an alloy of iron and nickel used as an alloying material in steelmaking. By advancing the downstream nickel industry, Indonesia expects to increase profits in this sector through the value of nickel processed products, job creation, and reduced carbon emissions.

Nickel Industry-related Issues

Besides the potential, the Indonesian government needs to pay attention to a number of important issues that come with the export ban. The issues include: (a) state revenue loss; (b) added value transfer, and; (c) employment.

First, Indonesia needs to consider the potential loss in government revenues. The ban on nickel exports risks the diminution of state tax revenue from companies and export duties so state revenues from downstream nickel industry must be able to replace the loss. One effort that can be done is to create incentives to attract investors. The government can offer tax holidays or tax leave – reductions to corporate income tax (PPh) exemptions for a certain period of time. In addition, government support in the form of ease of licensing to shorten the processing of investment permits can also minimise losses from reduced income. 

Several investors have shown interest in investing in nickel refining and processing in Indonesia. A Chinese company, GEM Co., has committed around $30 billion to invest and become partners in Indonesia’s nickel industry development projects. In mid-April 2022, Chinese battery giant producers, CATL, also began exploring investments in Indonesia for nickel mining and electric vehicle batteries production.

The second issue is the transfer of added value from mining companies to smelters. Indonesia’s local mining sector has to bear with the problems surrounding domestic nickel selling prices and the metal test grade assessment system. The export ban has forced mining companies to sell their nickel ore to domestic smelters at lower prices amid the current high world nickel price. Furthermore, national entrepreneurs have to deal with injustice in the nickel metal test levels assessment system. This discrimination shows when businessmen holding nickel mining business licences are required to use surveyors appointed by the government, while foreign smelter investors may appoint their own surveyors. The requirement caused different results of nickel content analysis, where the outcome of buyer surveyor analysis is often far below that of mining surveyors. Although the government aims to simplify the policies for foreign investors, the government must ensure that its policies will not affect domestic entrepreneurs negatively.

The third issue is related to employment. Although the ban on nickel ore exports is claimed to increase employment levels, especially in the smelting sector, the government should consider the impact of streamlining the mining sector. Despite the absence of credible statistics about workers in the nickel mining sector, data from BPS state that the proportion of the Indonesian manufacturing industry workforce in 2018-2020 has not increased significantly. Therefore, it is not certain that the export ban will benefit the community in this aspect.

Indonesia's policy to ban nickel ore exports is not a risk-free step. Indonesia's persistence will only bring benefits if it is balanced with special attention and risk mitigation from the Indonesian government on tax issues, ease of investment, transfer of added value from mining companies to smelters, and a concrete increase in the workforce. Synergy is utterly important to overcome risks and capitalise Indonesia's nickel export ban policy potential.

Various global financial institutions such as the International Monetary Fund and the World Bank have issued early warnings about the possibility of a global economic recession in 2023. The economic crisis that occurs in several countries this year is an early indication for next year’s recession. Moreover, Ned Davis Research predicts that the chance of next year's global economic recession is up to 98.1%.  

Quoted from Investopedia, recession is a condition in which a country's economy is slowing down significantly for a long period of time. The decrease of Gross Domestic Bruto (GDP), increasing unemployment rate, and declining consumer trust are the indications of recession. What are the factors that cause global economic recession in 2023 and how likely will Indonesia’s economy be in 2023?

High Inflation 

According to Bank Indonesia, inflation is the continuous increase of goods and services prices during a period of time. Inflation is not always bad if it still occurs within reasonable limits of each country’s national economy. For example, the United States (US) targets 2% of inflation yearly, Indonesia targets 4%, while Turkey targets 5% in one year. Yet, the current surge of inflation above the targets set in various countries impacts negatively on the economy. 

Boediono categorizes inflation into four types. First, mild inflation which is characterized by a low rate of inflation that occurs for a long period of time. This inflation is below 10% per year. Second, moderate inflation that may reduce people's welfare with a fixed income. This inflation category is up to 10-30%. Third, heavy inflation which is marked by the public's unwillingness to save in banks because the yields given are below the inflation rate. This inflation ranged from 30-100%. Lastly, hyper-inflation that is indicated by a general goods price increase up to more than 100% in a year period.

The most recent high inflation is ascribed to the huge disparity between supply and demand of commodities, which is further exacerbated by the Russia-Ukraine war. The disruption caused by the Russia-Ukraine war utterly impacts the supply of oil, gas, and food supply globally. Subsequently, the war prompts the surge of diminishing energy and commodities prices that lead to higher inflation. OECD’s interim chief economist Alvaro Pereira notes that the significant increase of raw material and energy is a consequence the world should pay for the ongoing Russia-Ukraine war. 

Based on the year-on-year data in August 2022, the inflation in Turkey and Argentina is 80,21% and 78,5% respectively. Developed nations such as the US and Germany also experience inflation up to 8,3% and 7,9% as of August 2022. Inflation in the US is at its highest in 40 years. As per August 2022, the inflation rate in Indonesia is at 4,69% and reached 5,95% in September which was caused by the rising price of food and energy.  

The differing influence each country has over international trade and economy matters in assessing the severity of global inflation. On one hand, countries with great economic power like the United States will have a worse impact on other countries and the entire global economy if inflation occurs. On the other hand, countries with little to no significant power will generate minimum impact. 

Additionally, the Executive Director of Institute for Development of Economics (INDEF) Ahmad Tauhid mentioned that the high level of inflation in various countries will increase the number of people living in poverty. Consequently, middle and poor households suffer more from their reduced purchasing power and savings as the prices of basic goods continue to soar.

The Rise of Interest Rate

In short, interest rate refers to the amount of interest set by the central bank as the reference for other financial institutions and products. To slow down the inflation, the central bank needs to increase the interest rate which will decrease the willingness of society to spend and borrow money. Increasing the interest rate will curtail the consumption demand level and eventually reduce the inflation rate. 

The aggressive policies to increase the interest rate have been implemented in many countries to reduce inflation. The US Central Bank, The Federal Reserve (The FED), has maintained its interest rate policy in recent months to push down inflation. The FED is predicted to increase the interest rate up to 3-4%, the highest in 15 years. Likewise, the central banks in England and the European Union also increase their interest rate. England sets the interest rate up to 2,25% as of September 2022, the highest in 14 years. The European Union central bank also sets the highest interest rate in 11 years, up to 1,25% as of September 2022. 

Despite aiming to impede the inflation, the surge of interest rate does not automatically dismiss the possibility of recession. The decreasing demand level due to high interest rates will decelerate the economic activity. According to the World Bank, the aggresive increasement of interest rate policy in many countries will also lead the world into a global economic recession in 2023. The increase of interest rate to reduce the inflation will slow down world Gross Domestic Product growth up to 0,5% in 2023 and induce global recession. 

Recession Potential in Indonesia

Minister of Finance of Indonesia Sri Mulyani mentioned that Indonesia will unlikely to experience an economic recession in 2023. Furthermore, Mulyani mentioned that some factors will obviate Indonesia from recession. The surplus of Indonesia’s international trade balance in August 2022 and the increase of manufacturing activity have been the positive catalyst for Indonesia’s economy in the midst of global economic uncertainty. Amidst the economic slowdown in several countries, the IMF and World Bank predict that Indonesia’s economy will still be able to grow up to 5,1% – 5,3% in 2022. Similarly, the Head of Fiscal Policy Agency (BKF) Indonesia Febrio Kacaribu mentioned that Indonesia’s economy will still grow up to 5,6% – 6% in the third quarter of 2022. 

However, Sri Mulyani urges Indonesian policymakers to stay vigilant in formulating and executing financial and monetary policies. The surge of interest rates to fight inflation prompts economic slowdown globally. Hence, despite the positive prediction of Indonesia’s economic stability, Indonesia policymakers should formulate and implement policies to anticipate and prevent domestic recession. 

The annual World Trade Organization Chairs Programme (WCP) Conference was successfully held on 25-27 July 2022, in Geneva, Switzerland. The representatives from World Trade Organization (WTO), WCP board, and WCP chairholders gathered to discuss various issues related to international trade and the vision for WCP years ahead. Topics such as the results of the 12th WTO Ministerial Conference (MC12), WTO responses towards the impact of COVID-19 pandemic, and the advancement of sustainable trade became the main focus of the three-days conference. 

Established in 2010, WCP is a programme that aims to enhance research activities and knowledge dissemination related to international trade in developing countries. Initially, there were only 14 academic institutions that were chosen as chairholders, in which Center for World Trade Studies (CWTS) UGM  has been one of the chairholder since the beginning. Currently, there are 36 universities from various developing countries that have joined the WCP scheme. 

The Director of CWTS UGM, Dr. Riza Noer Arfani, represented Indonesia in the 2022 WCP Conference. In this conference, Dr. Riza presented several case studies related to circular economy activities, MSMEs development, and Indonesia economic recovery which have been actively implemented by CWTS UGM since 2021. The activities of CWTS UGM related to the previously mentioned issues include both local and international workshops, webinar, journal publication, and podcast releases. Together with other delegates, such as the delegates of Mauritius, Barbados, and Kenya, Dr. Riza reiterates how WCP projects, which are relevant for both developed and developing countries, can play a significant role in promoting sustainable and inclusive international trade. 

During the annual conference, WTO Director-General Dr. Ngozi Okonjo-Iweala conveyed the importance of the chairholders role in propelling the implementation of MC12 by delivering research-based policy recommendations. In the closing statement delivered by WTO Deputy Director-General Xiangchen Zhang, the active participation from chairholders is hoped to maintain and improve the research and dissemination activities on international trade related issues, as well as collaborations with policymakers and stakeholders.  

ASEAN member countries have signed RCEP (the Regional Comprehensive Economic Partnership) with non-ASEAN countries: China, Japan, Australia, New Zealand, and South Korea. The signatory countries are expected to benefit from this agreement by gaining higher efficiency and enhanced economic development. ASEAN initiated RCEP in 2011, which was later negotiated from 2012 and eventually signed in 2020.In the midst of negotiations, India decided to withdraw from the agreement. RCEP, which has been implemented since the beginning of 2022, covers more than 30% of the world's GDP with a combined value of US$ 26.2 billion and represents one third of the world's population. This article will discuss the role of ASEAN and its interest in RCEP.

Prior to the signing of RCEP, ASEAN had established separate trade agreements with each of the RCEP signatory countries. Known as ASEAN+1 FTAs ​​(Free Trade Agreements), ASEAN cooperated with Australia and New Zealand under the framework of AANZFTA (2010), with China under ACFTA (2015), with South Korea under AKFTA (2007), and with Japan under AJCEP (2008). Besides initiating cooperation through ASEAN, ASEAN member countries also have bilateral trade agreements with  RCEP members such as IA-CEPA by Indonesia and Australia, which was also agreed in 2020. Furthermore, ASEAN also has exclusive trade agreements between its members such as AFTA (ASEAN Free Trade).

It is feared that the existence of RCEP will lead to the so-called spaghetti bowl effect, in which the increasing number of free trade agreements will be counterproductive to the goal of increasing regional trade because their contents overlap and are out of sync. Yet, RCEP has the potential to become a catalyst for ASEAN's trade efficiency  and provide a way out of the spaghetti bowl effect. Arguably, RCEP will not hinder the flow of ASEAN international trade, but will further support the improvement of ASEAN trade relations with its partners because RCEP has the ability to  unite each trade agreement that each country has previously made. 

ASEAN has a very big role in determining the success of RCEP, both through initiating and leading the negotiations by adhering to the concept of ASEAN Centrality. ASEAN Centrality is a principle that locates ASEAN at the core of every cooperation to protect its interests, especially from the interventions of world’s major powers.  This principle requires other parties, such as China and the United States, to follow the mechanisms that apply in the ASEAN region. ASEAN's leadership in the RCEP negotiation process is not merely driven by ASEAN’s high concern for regionalism in Asia-Pacific. Instead, ASEAN moves based on the motivation to improve its economy and trade because ASEAN  views that the implementation of its multilateral trade agreements have not been significantly impactful. Thus, it can be said that ASEAN's main interest is to enhance trade facilitation between ASEAN with its trading partners. ASEAN Centrality in the RCEP negotiation process signals ASEAN's determination to place itself as a leader and facilitator of RCEP to achieve its interests.

The manifestation of ASEAN Centrality in RCEP is not only present in ASEAN’s duty to fulfill its responsibility of promoting international trade as a leader. ASEAN Centrality should also be viewed from ASEAN's opportunities to encourage the creation of agreement clauses that can benefit ASEAN in securing its position. According to Mueller, ASEAN is in danger because RCEP actively involves world's powerful economic countries that will only use ASEAN as a market destination. It is true that RCEP does not revolve around ASEAN benefits alone, but ASEAN through its centrality will strengthen RCEP which guarantees the accommodation of ASEAN interests. This can be seen from the achievement of RoO (Rules of Origin) or provisions on the origin of goods as part of ASEAN's interests.

Similar to other trade agreements, RCEP is formulated to reduce tariffs and trade barriers to increase the volume and economic gains from international trade. For ASEAN, RCEP is notably influential in increasing the integration of ASEAN’s preceding agreements. At the same time, RCEP eliminates trade barriers related to both tariffs and non-tariff barriers. The agreement on RoO (Rules of Origin) in Chapter 3 of RCEP regulates the identity of traded goods and commodities. RoO provides identification of the goods’ origin country to indicate where a commodity comes from. However, RoO can be a trade barrier when the regulations are strictly binding and detailed. Therefore, RoO becomes one of the most complicated RCEP negotiations because each country can be committed to one to three trade agreements with various parties. The complexity of RoO negotiation comes from RCEP's obligation to reconcile the interests of the countries involved since neither party wants RoO to jeopardize their future trade.

RoO provides a standard for a product set to be marketed to other countries by providing an integrated channel of various information according to the standards and criteria stipulated in a trade agreement. RoO gets extra attention in an FTA due to its ability to help countries of origin attain preferential and special treatment from countries that have agreed on the same international trade agreement. This is highly beneficial for each country in RCEP because RoO is prone to add quite a lot of trade costs, ranging from 1.4% to 5.9%. RCEP’s RoO arrangement is estimated to reduce export costs and accelerate trade between countries within the RCEP framework by US$ 90 billion per year. This certainly benefits ASEAN in increasing trade volume and simplifying international cooperation. The harmonization of RoO between ASEAN and fellow RCEP members as trading partners who previously had different regulations made trade more efficient, away from the spaghetti bowl effect.

As a leader in the RCEP negotiation process, ASEAN is considered successful for bringing many countries to agree on one agreement that is not simple. At the same time, ASEAN can also implement the value of ASEAN centrality to ensure the advancement of its interests. In addition to removing trade barriers such as with the RoO agreement, RCEP makes it easier for ASEAN to increase trade efficiency with its partners. The number of ASEAN+1 FTAs strengthens ASEAN’s drivein uniting its trading partners into a new trade cooperation. These factors allow RCEP to pave the way for achieving more of ASEAN's objectives instead of hindering the progress.

The swift influence of globalization encourages the creation of fashion trends that are changing very quickly. To survive, various fashion companies not only compete with competitors who offer low prices, but also compete to meet consumer demand in accordance with the latest trends or called fast fashion (Barnes & Lea-Greenwood, 2010). The phenomenon of fast fashion continues to grow with two main characteristics, namely reducing production process delays and increasing consumer choice by ensuring the stocks of goods constantly (Hines, 2004). Therefore, various fashion companies mass-produce 52 “micro-seasons” every year or equal to one new collection every week and it is estimated that by 2050 the production can reach 160 million tons.

Mass fashion production comes with consequences. UNEP notes that the fashion industry accounts for 8-10% of carbon emissions globally – more than the amount of carbon emitted by international aviation and sea freight. In the production process, this industry also requires abundant water resources and contributes to 20% of global wastewater as a whole. To produce synthetic textiles, this industry requires 42,534 kilo tons of plastic annually which then ends up as waste in the sea. Environmental problems in this industry also arise in the post-consumption phase with the accumulation of end-of-life fashion waste. These various data indicate that mass production in this industry has a significant impact on the environment without any serious handling efforts.

In order to support sustainability, the fashion industry which has been running a linear approach to the manufacturing, distribution and consumption processes must switch and be replaced with a circular economy approach through 3 main concepts, namely reduce, reuse, and recycle or called circular fashion. Circular fashion implementation requires strong support and commitment from various parties including the government as a regulator. This concept is implemented in a complex manner in every continuous phase starting from the early stages of the fashion product life cycle, namely at the design stage until when its use is complete by ensuring that the product will not end up polluting the environment (Brismar, 2017).

However, the implementation of circular fashion still faces challenges (Kirchherr, 2018). For example, companies tend to buy new synthetic textile materials because they are cheaper than recycling as a result of the government's policy of subsidizing fossil fuels being used to produce these materials. Therefore, public and business people's awareness of the importance of circular fashion needs to be accompanied and supported by regulatory readiness as the main supporting factor that has binding coercive power. Environmental problems in the era of sustainable development need to be resolved through the role of law as a social engineering tool. In this case, law is used as a scientific formulation, logical approach, and inventive skill to regulate, manage, and move society towards various reforms (Pound, 1965).

Researchers argue that the fast fashion phenomenon needs to be handled with smart regulatory solutions or smart regulation (Preston, 2017). Through this approach, while most of the investment, innovation and implementation of circular fashion is carried out by the private sector, the government plays an important role in passing policies that support innovation, investment and sustainable business activities. Policies to deal with fast fashion are designed as a whole through a series of policies that support the use of environmentally friendly materials and other innovations, fiscal policies by disincentivizing activities that are contrary to resource protection efforts, to end-of-life product regulation. 

The concept of smart regulation is no longer just an idea along with the publication of the European Union Strategy for Sustainable and Circular Textiles by the European Union last March. By 2030, the European Union has a vision to ensure that all textile products on its market are long-lived, made from recycled fiber, free from hazardous materials, and produced in a process that respects social and environmental rights. In this strategy, the European Union succeeded in designing a comprehensive policy and showing full support for the implementation of circular fashion.

The European Union regulates the start of the textile life cycle by implementing stricter product design rules to reduce microplastic waste from synthetic materials. In order to answer the cultural challenge in the form of public awareness, Digital Product Passport (DPP) is implemented to collect data about products and their supply chain and share it throughout the business chain so that all business people including consumers have a good understanding of the product, its supply chain, and environmental impact. As for dealing with end-of-life waste, the European Union applies Extended Producer Responsibility (EPR) which requires producers to be responsible for managing end-of-life products marketed in the country with the concept of reuse and recycle. This comprehensive policy from upstream to downstream has implications to 16 legislative actions which include the creation of new regulations such as the Eco Design for Sustainable Product Regulation, as well as revision and harmonization of related regulations, including the Textile Labeling Regulation, Waste Framework Directive, Best Available Techniques Reference Documents, and Taxonomy Regulation.

On the other hand, regarding the policies of the European Union, Kerry Bannigan, Executive Director of the Fashion Impact Fund––an organization that supports the role of women in the fashion industry––noted that fashion is a global issue that requires commitment from other countries to cooperate in building a circular economy infrastructure. Currently, 15 developed and developing countries along with various European Union member countries who are members of the Global Alliance on Circular Economy and Resource Efficiency (GACERE) have committed to implementing and advocating for circular fashion in 2020. In addition, G20 countries also held workshops in circular fashion which discuss the role of the state to contribute through supportive policies in 2021. However, to date, apart from the European Union, only the United States has regulated circular fashion through the New York Fashion Sustainability and Social Accountability Act which is currently entering the legislation process. Therefore, although various countries are currently committed to circular fashion through international cooperation, there are still many developed and developing countries that have not implemented this concept at the level of formation and harmonization of regulations.

As a reflection, Indonesia as one of the developing countries has paid attention to solving the problem of textile waste in a sustainable manner in the green industry program, precisely through the Regulation of the Minister of Industry of the Republic of Indonesia Number 13 of 2019. More broadly, the responsibility of the textile industry in relation to wastewater quality standards is regulated through Law Number 32 of 2009 concerning Environmental Protection and Management jo. Minister of Environment Regulation Number P.16/MENLHK/SETJEN/KUM.1/4/2019. However, these various regulations have not included new breakthroughs in relation to ongoing efforts to deal with the current fast fashion phenomenon. On the other hand, the development of environmental law in Indonesia has also been carried out partially, as evidenced by the fossil fuel subsidies that are still being implemented by the government, which reached USD 8.6 billion in 2019 and at the beginning of the pandemic, the G20 countries allocated USD 318.84 billion to support fossil energy. This indicates that the existing policies have not been compiled in a systematic and integrated manner to address environmental problems. Whereas on the one hand, this phenomenon continues to be worrying, supported by the fact that Indonesia has produced 2.3 million tons of textile waste in 2021. In fact, the Indonesian government's efforts to give an appeal about the circular economy to the people in Indonesia have been carried out in collaboration with the Danish government. However, the cooperation that has been established has not been able to encourage Indonesia to implement real policies and harmonize regulations so that this cooperation still needs to be strengthened.

In closing, a legal adage “het recht hink achter de feiten aan” describing legal conditions that are always struggling to follow reality. However, law as a tool of social engineering has been able to answer the modern problems that are happening today. Based on the description above, regulation and international cooperation play a central role in implementing circular fashion. The urgency to overcome fast fashion problems that have a major impact on the environment needs to be supported by the government's strong commitment to being on the pro-environment side and translating it into a holistic regulatory level. Furthermore, circular fashion is an effort that must be encouraged by cooperation between developed and developing countries. Thus, it is hoped that countries around the world have the same vision and mission to create an atmosphere that supports the implementation of circular fashion globally.

References

“A New Textiles Economy: Redesigning Fashion’s Future,” 2017. https://ellenmacarthurfoundation.org/a-new-textiles-economy

Barnes, L., and G. Lea‐Greenwood. “Fast Fashion in the Retail Store Environment.” International Journal of Retail & Distribution Management 38, no. 10 (2010): 760–72. https://doi.org/https://doi.org/10.1108/09590551011076533

Boucher, Julien, and Damien Friot. “Primary Microplastics in the Oceans: A Global Evaluation of Sources,” 2017. https://portals.iucn.org/library/sites/library/files/documents/2017-002-En.pdf

Brismar, Anna. “What Is Circular Fashion?,” 2017. https://greenstrategy.se/circular-fashion-definition/

Directorate-General for Environment. EU Strategy for Sustainable and Circular Textiles (2022). https://ec.europa.eu/environment/publications/textiles-strategy_en 

Institute for Essential Service Reform. “Subsidi Energi Fosil Menghambat Transisi Energi,” 2021. https://iesr.or.id/subsidi-energi-fosil-menghambat-transisi-energi 

Kirchherr, Julian, Laura Piscicelli, Ruben Bour, Erica Kostense-Smit, Jennifer Muller, Anne Huibrechtse-Truijens, and Marko Hekkert. “Barriers to the Circular Economy: Evidence From the European Union (EU).” Ecological Economics 150 (2018): 264–72. https://doi.org/https://doi.org/10.1016/j.ecolecon.2018.04.028

Kompas. “Kurangi Limbah Tekstil, Bappenas Ajak Industri Terapkan Konsep Fashion Sirkular,” 2022. https://money.kompas.com/read/2022/02/24/083300926/kurangi-limbah-tekstil-bappenas-ajak-industri-terapkan-konsep-fashion-sirkular?page=all 

“New York Fashion Sustainability Act: Now In Committee,” 2022. https://www.natlawreview.com/article/new-york-fashion-sustainability-act-now-committee

Preston, Felix. “A Global Redesign? Shaping the Circular Economy.” Chatham House Briefing, 2012. https://www.chathamhouse.org/sites/default/files/public/Research/Energy, Environment and Development/bp0312_preston.pdf 

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The development of cryptocurrencies adoption is increasingly massive in recent years. With various positive aspects of cryptocurrencies such as transparency, transaction speed, and also security, some countries such as El Salvador have begun to adopt cryptocurrencies as a domestic payment instrument. Since the emergence of Bitcoin in 2008, various cryptocurrencies have emerged with their various uses and advantages. One issue that comes with the proliferation of the use of cryptocurrencies and the expansion of adoption in the world's economy is the electrical energy used to keep the blockchain system running. According to information from the Columbia Climate School, the energy required to run the Bitcoin system alone exceeds Argentina's annual energy consumption. Furthermore, such massive consumption of electrical energy produces 65 megatons of carbon dioxide every year, which is equivalent to the total emission produced by Greece each year. Even the energy used in the Bitcoin mining process per minute is enough to meet the energy needs of the average United States household for 17 years. Furthermore, based on research conducted by Cambridge University, Bitcoin mining uses more electricity than the combined electricity consumption of Ukraine and Norway per year.

In addition to the use of cryptocurrencies, with their various advantages and conveniences, it has brought with it a more fundamental issue in recent years, namely the increasing use of energy. In addition, the issue of where the energy comes from is also important because the majority of energy sources in the world still come from extractive mining products such as coal. According to Coinbase, the use of energy in the crypto system is because the majority system is still oriented towards the Proof of Work system rather than the Proof of Stake system.

It is clear that the massive use of energy to keep the cryptocurrency system running requires an increase in the amount of energy produced. This has in fact triggered an increase in the production of electrical energy, such as from coal. The revival of a coal mining company, for example, occurred in the United States where one of the power plants that almost went bankrupt since closing, Hardin, who suffered a loss from 2018 again, got profits in his business due to the increasing energy demand for crypto miners. Even in 2020, the energy generated from this coal power plant is only intended for crypto miners. According to The Guardian, Hardin is a small part of the revival of coal-fired power plants due to the increased use of crypto in recent years.

Efficiency of Cryptocurrency

Cryptocurrencies are still developing massively in the last 10 years. The wider adoption of the community shows the potential for the financial system which actually started because of the financial crisis in 2008 with the emergence of Bitcoin which was allegedly developed by Satoshi Nakamoto (could be the name of the group/person). With systems that can still be developed, such as from Proof of Work to Proof of Stake, the blockchain system can reduce the consumption and energy required by the cryptocurrency system to keep the system running. This was conveyed, for example, in the “Change the Code not the Climate” campaign coordinated by Greenpeace United States and the Environmental Working Group that Bitcoin and cryptocurrencies need to improve the system in cryptocurrencies to make system efficiency, which then reduces energy consumption in the running of the system.

To NBC News, researchers from the Ethereum Foundation said that by using a proof of stake system, the energy used can be reduced to 99.99% lower than using a proof of work system. This certainly gives optimism for those who support crypto and also pays attention to the environment. Some cryptocurrency systems will and have used proof of stake systems such as Ethereum and Cardano. Reporting from Forbes, Proof of Stake removes the system elements of computing competition and makes one machine only work to solve one coding problem at a time. This is different from Proof of Work where many computer machines try to complete many transactions at one time which of course requires a lot of energy.

Utilizing renewable energy

With the massive amount of energy used, the use of environmentally friendly energy is important and pivotal, especially to support the cryptocurrency transaction system which is increasingly being adopted by the community. This has been done, for example, in Costa Rica, which has a surplus of renewable energy. According to DW News, the energy needed to carry out crypto mining is obtained from energy generated from hydroelectric power plants. However, Jose Daniel Lara, a researcher from UC Berkeley said that Costa Rica is a special country because it has a surplus of renewable energy and the logic of crypto mining with renewable energy is possible.

Therefore, it is important for countries that want to adopt the use of cryptocurrencies to not only pay attention to the convenience and advantages of using cryptocurrencies and blockchain technology, but also to pay attention to energy sources to keep crypto technology systems running well.

The Ministry of Trade of the Republic of Indonesia (Kemendag) has officially resumed negotiations on the Comprehensive Economic Partnership Agreement (CEPA) between Indonesia and Peru after a delay since 2017. Reporting from IDN Financials, Minister of Trade Muhammad Lutfi and Deputy Minister of Foreign Trade of Peru Ana Cecilia Gervasi Díaz held a special meeting to immediately start communicating and synergizing together so that trade negotiations between Indonesia and Peru can be carried out immediately. The meeting was held on the sidelines of the APEC 28th Minister Responsible For Trade (MRT) series of meetings held from 21 to 22 May 2022 in Bangkok, Thailand.

Minister of Trade Muhammad Lutfi revealed that the Indonesia-Peru CEPA negotiations had been delayed for 5 years due to the approach used for negotiations in 2017, when the Peruvian Minister of Foreign Trade and Tourism invited Indonesia to start the cooperation at the end of 2017 after the United States resigned from the Trans-Pacific Partnership (TPP). The steps taken by the Peruvian government are considered quite aggressive in the context of developing a cooperation plan in free trade with Indonesia.

The United States' withdrawal from the TPP on Monday (23/1/2017) strained their relations with their Asian allies with close ties to China. At that time, Peru had established free trade agreements with 15 countries with China as one of the countries that began to establish diplomatic relations. Negotiations for trade cooperation between Indonesia and Peru were delayed after the incident, but then managed to re-establish five years later in the middle of 2022.

The leaders of the two countries observed enormous potential that could provide positive benefits in the trade sector of both parties with the superior commodities owned by each country. The main commodities that Indonesia offers to Peru include motor vehicles, biodiesel, unused postage stamps, footwear, and yarn fibers. Meanwhile, Peru will be actively exporting cocoa beans, fertilizers, wine, coal, and raw zinc to Indonesia. In order to accelerate the establishment of a mutually beneficial cooperation agreement, they increased their pace to finalize the framework of their agreement.

In the first quarter of 2022, the total profit obtained by Indonesia and Peru in their trade sector was US$ 99 million, an increase of 18.84% compared to the first quarter of last year which was still around US$ 83.30 million. Meanwhile, throughout 2021, the total profit from the Indonesia-Peru sector was recorded at US$ 402.70 million, an increase of 61.8% compared to 2020 which was recorded at US$ 248.82 million. International trade activities with Peru managed to generate a surplus of US$ 234.21 million for Indonesia in 2021, an increase of 142% compared to 2020.

On Friday last week, (13/5) at 06:36, gold prices experienced a significant decline worldwide. This decline occurred after the price of gold had reached its peak on Tuesday (8/3) at US$ 2052.4 per troy ounce. Currently, the price of gold is pegged at US$ 1,818.93 per troy ounce, down 0.15% from the previous day's price of US$ 1,850.6 per troy ounce.

This price change was the result of a 3.4% price correction that occurred a week earlier on Friday (6/5), where the gold price was at US$ 1882.9. Moreover, the evidence of gold prices decreasing appeared more prominent when compared to the price on Friday (13/5) with the price a month earlier on Tuesday (12/4), which was US$ 19666.5. On Wednesday (13/4), the price of gold was still around US$ 1977.7, 7.8% higher than the price on Friday (13/5). Until this day, the gold price in May still remains on a flat line in the same range and has not shown any signs of recovering.

Good Returns considers the main reason behind the constant decline in gold prices is somehow related to the United States Dollar’s value increase. This occurs as the effect of the Federal Reserve's benchmark rise of interest rate. The main factor that caused the United States Dollar to skyrocket is the market expectation of a 50 basis points interest rate hike in June. High market expectations for an increase in interest rates are caused by the high inflation rate in April 2022 which reached 8.3%, which is far from the normal rate of 2%.

Quoted from Reuters, Bart Melek stated that the Federal Reserve shows concern on the possibility of more aggressive increase of interest rates on the United States Dollar which could continue to lower gold prices. The same issue was also expressed by Edward Moya from Oanda, where he explicitly stated that the strengthening of the United States Dollar made gold in the danger zone. It is feared that the price of gold will continue to decline to reach the range of US$ 1,750 if the price cannot penetrate the US$ 1,800 mark in the future.

Even though the price of gold has not yet shown progress, the price of gold still has the potential to rise if global economic conditions weaken. Reporting from CNBC, Ravindra Rao from Kotak Securities stated that gold will remain the safest asset of choice for people when economic conditions deteriorate. He also stated that the price of gold is unlikely to rise sharply unless the United States Dollar weakens drastically, like what happened in January 2022.

Reporting from Kompas.com, at the end of January 2022 the price of gold had increased due to geopolitical conditions, when the conflict between Russia and Ukraine had just begun. At that moment, these geopolitical conditions caused the Federal Reserve not to raise its benchmark interest rate which caused the value of the United States Dollar to decline. This can increase public interest in investing in gold and lift positive sentiment towards precious metals, especially gold.

It is expected that in May 2022, President Biden will formally announce a new economic cooperation framework with Indo-Pacific countries named Indo-Pacific Economic Framework (IPEF). Previously, President Biden submitted the IPEF proposal during the East Asia Summit in 2017 as a strategy to enhance the cooperation of economic and international trade with Indo-Pacific nations. Despite not being formally announced and itemized, according to the United States statement there are four main pillars that become crucial in IPEF, namely fair and resilient trade, resilient supply chain, infrastructure, decarbonization and renewable energy, and taxation and anti-corruption. This policy, however, also depicts the shifting of the US cooperation  policy towards the Indo-Pacific countries which previously have been dominated by security and defense cooperation. 

According to the research report by Centre for Strategic and International Studies (CSIS), the inclusivity of cooperation matters for the countries particularly in gathering the developed and developing nations that will support all countries in the Indo-Pacific. Hence, this cooperation will also push to include countries such as Australia, Japan, South Korea, and also all of 10 ASEAN member states to join IPEF. Indonesia Foreign Minister, Retno Marsudi also hopes that IPEF will also support the existing cooperation framework such as ASEAN Outlook on Indo-Pacific (AOIP). 

Beside strengthening conventional trade and economic cooperation, IPEF cooperation will also acknowledge regional digital economy advancement. This will also give opportunities towards digital economy advancement which has massive potential. Digital economy advancement within ASEAN countries such as Indonesia, Vietnam, Malaysia, Singapore, and Thailand can be a leeway 

Contender for China in the Indo-Pacific

Most of the US policies in recent years seem inalienable from the strategic balancing towards China in the Indo-Pacific, including IPEF cooperation. In recent years, China has been gradually dominating the economic aspect in the Indo-Pacific by actively forging regional cooperation such as Regional Cooperation Economic Partnership (RCEP). This is arguably apprehensive for the US in the context of the Indo-Pacific. Furthermore, integration and dependence from some of the Indo-Pacific countries towards China is also worrying for the US, geo-economically and strategically. 

Other countries such as South Korea, Japan, Australia have been not only gradually increasing their dependence on China economically through bilateral trade but also joining the RCEP mechanism which to many analyzed is perceived as China’s economic statecraft in the region. Therefore, the US propels Japan, South Korea, and Australia to join the IPEF in order to balance China's influence towards these countries. According to South China Morning Post, IPEF is also utilized as an alternative to fill the void left by the US since withdrawing from TPP uner President Trump administration.  

The Chinese government argues that the initiation of IPEF is an effort to alienate China from its regional partners in the Indo-Pacific. The Chinese Foreign Minister said that IPEF is a “Cold War mentality” strategy that still exists in the US foreign policy strategies. 

More than a mere “jargon”

According to the South China Morning Post, the governments of Indo-Pacific nations hope that the IPEF cooperation should give economic incentives more than support for domestic trade only. Instead of merely a “jargon” that depicts the US revival in the region, the US through IPEF should also broaden market access to Indo-Pacific nations. This is indeed in line with the research conducted by CSIS that Indo-Pacific have welcomed the IPEF, but at the same time they are expecting the US to broaden market accession to their domestic products that will also benefit the US by enhancing the trust between Indo-Pacific nations towards the US government. Vietnam Prime Minister, Pham Minh Chinh mentioned that Vietnam is ready to fully support the IPEF but still need more time to reconsider the benefit of joining the initiative. 

The clarity of IPEF cooperation that differs from other existing regional cooperation will be politically lucrative for the US in the Indo-Pacific region. The benefits and economic incentives for the Indo-Pacific nations such as market access and trade facilitation will depict that the IPEF cooperation is not merely for the US strategic purpose in the Indo-Pacific but also can be portrayed as the US commitment to  assist economic advancement in the region.