The Sanction and Embargoes

As we know the Sanctions and embargoes are political trade restrictions put in place against target countries with the aim of maintaining or restoring international peace and security. The terms of embargoes and sanctions refer to governmental action that distorts free flow of trade in goods, services or ideas for decidedly adversarial and political, rather than economic purpose. Sanctions and embargoes are political trade tools, mainly put in place by the United Nations (UN) and the European Union (EU). For most of America's history, the word "embargo" was used to refer specifically to a prohibition on the departure of ships or exports from a nation's own ports, whereas the words "boycott" and "no importation" were used to describe prohibitions of imports or ship entries, and "no intercourse" was used to describe a total prohibition of trade with a nation. But the word "embargo" also was used generically to refer to all stoppages of trade. Sanctions are coercive restrictions implemented for political reasons by countries and international organizations. The aim of sanctions is to maintain international peace and security and to combat violations of international law. They are usually adopted to bring about a change in policy or activity by the target country, government, entities or individuals. Sanctions may take various forms such as arms or other types of embargoes (a legal ban or boycott on trade in certain goods) and/or economic, financial, diplomatic or cultural measures. The objective of each measure should be clearly stated. Sanctions and embargoes are reviewed and either lifted, revoked or adapted in the light of changes in the behavior of the target.
The main aim of all UN sanctions and embargoes is to implement decisions by its Security Council to maintain or restore international peace and security. The EU imposes sanctions and embargoes to further its Common Foreign and Security Policy (CFSP) objectives. The EU can impose measures to preserve peace and strengthen international security, promote international co-operation, and safeguard the common values and security of the EU. EU measures can also be imposed to uphold respect for human rights, democracy and the rule of law.
Sanctions, including economic sanctions, are put in place for a number of reasons. All recent UN and EU sanctions contain information as to why they have been imposed and specify what their aim is. Their principal purpose is usually to change the behavior of the target country's regimes, individuals or groups in a direction which will improve the situation in that country.
The ultimate objective of a sanction varies according to the situation. For instance, an arms embargo and a ban on the export of certain items or raw materials could be aimed at supporting a peace process and restricting the financing of weapons by the combatants. Sanctions may also be aimed at preventing weapons from falling into the wrong hands, disrupting terrorist operations, or trying to change the policies and actions of the target.

TYPES OF SANCTIONS AND EMBARGOES
When a sanction or embargo is set, the UK follows international procedure to put it in place in British law. The United Nations (UN) Security Council imposes sanctions through Security Council Resolutions. The European Union (EU) acts on these by adopting a Common Position and where appropriate, an EU regulation directly applicable to member states is introduced. Where sanctions and embargo measures require more than administrative action to implement them, the UK introduces new, or amends existing, secondary licensing and enforcement legislation.
The most frequently applied measures are:
• embargoes on exporting or supplying arms, and associated technical assistance, training and financing
• a ban on exporting equipment that might be used for internal repression
• asset freezes on individuals in government, government bodies and associated companies, or terrorist groups and individuals associated with those groups
• travel bans on named individuals
• bans on imports of raw materials or goods from the sanctions target
Other measures may be applied according to individual circumstances.
Arms embargoes are imposed by the UN and EU on "arms and related materiel", for example, military ammunition, weapons and goods. The UK interprets this as covering all goods and technologies on the Military List. Controls on the supply of military items between another third country and the sanctions target (trafficking and brokering) also apply.
THE EXAMPLE OF EMBARGOES AND SANCTIONS
The United States Embargo against Cuba (described in Cuba as el blouse, Spanish for “the blockade”) is a commercial, economic, and financial embargo partially imposed on Cuba in October 1960. It was enacted after Cuba expropriated the properties of United States citizens and corporations and it was strengthened to a near-total embargo in February 1962 The embargo was codified into law in 1992 with the stated purpose of maintaining sanctions on the Castro regime so long as it continues to refuse to move toward “democratization and greater respect for human rights”. It is entitled the Cuban Democracy Act. In 1996, Congress passed the Helms-Burton Act, which further restricted United States citizens from doing business in or with Cuba, and mandated restrictions on giving public or private assistance to any successor regime in Havana unless and until certain claims against the Cuban government are met. In 1999, U.S. President Bill Clinton expanded the trade embargo even further by ending the practice of foreign subsidiaries of U.S. companies trading with Cuba. In 2000, Clinton authorized the sale of certain “humanitarian” US products to Cuba.
It has been advocated that the pro-embargo Cuban-American exiles, whose votes are crucial in Florida, have swayed many politicians to also adopt similar views. The Cuban-American views have been opposed by business leaders whose financial interests prompt them to argue that trading freely would be good for Cuba and the United States. The embargo has been roundly condemned by the most of the international community. At present, the embargo, which limits American businesses from conducting business with Cuban interests, is still in effect and is the most enduring trade embargo in modern history. Despite the existence of the embargo, the United States is the fifth largest exporter to Cuba

Foreign Direct Investment (FDI)

APA ITU FDI?

Investasi langsung asing (FDI) dalam bentuk klasik didefinisikan sebagai sebuah perusahaan dari satu negara melakukan investasi fisik untuk membangun sebuah pabrik di negara lain. Ini adalah pembentukan suatu perusahaan oleh orang asing. [1] Secara lebih spesifik, investasi langsung asing adalah lintas-perbatasan mekanisme tata kelola perusahaan di mana perusahaan memperoleh aktiva produktif di negara lain. [2] Its definisi dapat diperluas untuk mencakup investasi yang dilakukan untuk memperoleh bunga abadi di perusahaan-perusahaan yang beroperasi di luar ekonomi investor. [3] hubungan FDI terdiri dari perusahaan induk dan afiliasi asing yang bersama-sama membentuk bisnis internasional atau perusahaan multinasional (MNC).
Dalam rangka untuk memenuhi syarat sebagai investasi FDI harus mampu perusahaan induk kontrol atas afiliasi asing. IMF mendefinisikan kontrol dalam hal ini sebagai memiliki 10% atau lebih dari saham biasa atau kekuatan suara dari sebuah perusahaan yang tergabung atau yang setara untuk sebuah perusahaan tak tergabung; kepemilikan saham rendah dikenal sebagai investasi portofolio.
JENIS INVESTOR ASING LANGSUNG
Seorang investor langsung asing dapat diklasifikasikan dalam setiap sektor ekonomi dan bisa menjadi salah satu dari berikut ini:
1. Perorangan
2. Sekelompok individu yang terkait;
3. Gabungan (group) atau entitas;
4. Perusahaan publik atau perusahaan swasta;
5. Kelompok perusahaan terkait;
6. Badan pemerintah;
7. Estate (hukum), kepercayaan atau organisasi kemasyarakatan lainnya; atau
8. Kombinasi di atas.

METODE INVESTASI ASING LANGSUNG
Investor langsung asing dapat memperoleh 10% atau lebih dari hak suara suatu perusahaan dalam suatu perekonomian melalui salah satu metode berikut:
1. Dengan memasukkan anak perusahaan atau perusahaan
2. Dengan mengakuisisi saham di perusahaan terkait
3. Melalui merger atau akuisisi dari perusahaan yang tidak berhubungan
4. Berpartisipasi dalam ekuitas joint venture dengan investor atau perusahaan lain
Insentif investasi asing langsung dapat mengambil bentuk-bentuk berikut:
1. Tarif pajak korporasi dan pajak penghasilan rendah
2. Konsesi jenis pajak lainnya
3. Tarif preferensi
4. Zona ekonomi khusus
5. Subsidi investasi keuangan
6. Pinjaman lunak atau jaminan pinjaman
7. Lahan gratis atau tanah subsidi
8. Relokasi subsidi
9. Pelatihan kerja & pekerjaan subsidi
10. Infrastruktur subsidi
11. Research & Development support
12. Pengurangan dari peraturan (biasanya untuk proyek-proyek besar)

PENTINGNYA FDI BAGI DUNIA GLOBAL
Jawaban yang sederhana adalah bahwa membuat investasi asing langsung memungkinkan perusahaan untuk menyelesaikan beberapa tugas:
1. Menghindari tekanan pemerintah asing untuk produksi lokal.
2. Menghindari hambatan perdagangan, tersembunyi dan sebaliknya.
3. Membuat bergerak dari penjualan ekspor domestik secara lokal berbasis kantor penjualan nasional.
4. Kemampuan untuk meningkatkan kapasitas produksi total.
5. Kesempatan untuk co-produksi, usaha patungan dengan mitra lokal, pemasaran bersama pengaturan, perizinan, dll;
Efek yang paling mendalam telah terlihat di negara-negara berkembang, di mana tahunan arus investasi langsung asing telah meningkat dari rata-rata kurang dari $ 10 milyar pada tahun 1970-an dengan rata-rata tahunan kurang dari $ 20 milyar pada tahun 1980-an, meledak di tahun 1990-an dari $ 26,7 miliar pada tahun 1990 menjadi $ 179 miliar pada tahun 1998 dan $ 208 miliar pada tahun 1999 dan kini terdiri dari sebagian besar FDI global .. Didorong oleh merger dan akuisisi dan internasionalisasi produksi dalam berbagai industri, FDI ke negara-negara maju tahun lalu naik menjadi $ 636 miliar, dari $ 481 miliar pada tahun 1998 (Sumber: UNCTAD). Pendukung investasi asing menunjukkan bahwa pertukaran arus investasi menguntungkan kedua negara asal (negara dari mana berasal investasi) dan negara tuan rumah (tujuan investasi).

Penjelasan sederhana ini adalah perbedaan perspektif antara eksekutif dari perusahaan-perusahaan multinasional dan kecil dan perusahaan menengah. Perusahaan multinasional hampir selalu berkaitan dengan kapasitas produksi di seluruh dunia dan kedekatan dengan pasar utama. Perusahaan kecil dan menengah cenderung lebih peduli dengan menjual produk mereka di pasar luar negeri. Munculnya Internet telah diantar masuk yang baru dan sangat berbeda pola pikir yang cenderung lebih berfokus pada masalah akses. UKM khususnya sekarang berfokus pada akses ke pasar, akses terhadap keahlian dan sebagian besar dari semua akses ke teknologi.

Akses pasar yang baru juga merupakan alasan utama lain untuk berinvestasi di luar negeri. Pada tahap tertentu, ekspor produk atau jasa mencapai massa kritis jumlah dan biaya produksi atau di mana lokasi asing mulai menjadi lebih hemat biaya. Setiap keputusan mengenai investasi dengan demikian kombinasi dari sejumlah faktor-faktor kunci termasuk: penilaian sumber daya, internal, dan persaingan.


Apa yang akan menjadi beberapa persyaratan dasar untuk mempertimbangkan perusahaan investasi asing? Tergantung pada sektor industri dan jenis bisnis, investasi langsung asing dapat menjadi pilihan yang menarik dan. Dengan globalisasi yang cepat di berbagai industri dan integrasi vertikal dengan cepat mengambil tempat di tingkat global, minimal perusahaan harus terus mengikuti tren global dalam industri mereka. Dari sudut pandang yang kompetitif, penting untuk mengetahui apakah perusahaan pesaing yang memperluas ke pasar asing dan bagaimana mereka melakukan hal itu. Pada saat yang sama, ia juga menjadi penting untuk memantau bagaimana globalisasi mempengaruhi klien domestik. Seringkali, menjadi keharusan untuk mengikuti ekspansi klien kunci luar negeri jika hubungan bisnis yang aktif harus dipertahankan.

TRADE AND INVESTMENT LIBERALIZATION EFFECTS ON SME DEVELOPMENT: A LITERATURE REVIEW AND A CASE STUDY OF INDONESIA

International trade and investment policy have undergone fundamental change in Indonesia over the past two decades. Significant trade liberalization began in 1986 and since 1994 Indonesia has significantly reduced its applied MNF tariffs from an unweighted average of about 20% in 1994 to 9.5% in 1998. In 1998, tariffs on food items were reduced to a maximum of 5%. Besides tariffs, Indonesia has undertaken to remove all non-tariff barriers and export restrictions. Since the beginning of the 1997/98 Asian financial crisis, Indonesia has also deregulated its trade regime in the main agricultural commodities (except rice, for social reasons), terminated production and trade monopolies in certain intermediate industries (cement, plywood, rattan) and reduced export taxes on wood.

The impact of international trade and investment policy reforms on the Indonesian economy, focusing on economic growth and development of domestic manufacturing industry has been studied extensively enough. However, the implication of these trade and investment policy reforms on the growth of small and medium enterprises (SMEs) in Indonesia remains an under-researched area of both the literature on SMEs in Indonesia and in general.

Following a comprehensive review of the available literature on the effects of international trade and investment policy reforms in section II, overviews of International trade and investment reforms in Indonesia and of the development of Indonesian SMEs are given in, respectively, sections III and IV. Effects of the reforms on Indonesian SMEs are examined in section V, complemented by findings from a cased study of a cluster of Indonesian manufacturing SMEs in section VI. Conclusions and policy recommendations are in section VII.

No doubt that the surge in exports of manufactured goods from Indonesia that occurred in the late1980s until the mid-1990s coincided with a sharp increase in FDI in the country. Several previous studies have indicated that multinational enterprises (MNEs) were the source of a large portion of the surge of manufactured exports and also made important contributions to changes in export composition of Indonesia.
Trade policies in Indonesia also played an important role in the growth of the country’s manufactured exports and the change in composition of manufactured exports. James and Ramstetter (2005) emphasized how low protection which adopted by the Indonesian government in the 1980s with respect to certain industries was a key facilitator of rapid export growth of those industries. Despite a slowdown in export growth that began in 1996 and continued into 1998 with the Asian financial crisis, Indonesia did not reverse its export-oriented trade liberalizing reforms. After the crisis, many MNEs expanded their operations in Indonesia (Takii and Ramstetter 2004).

1. Effects of International Trade Reform on SMEs

It is generally believed that trade liberalization should beneficial for domestic economy as well as the world as a whole. At an aggregate level, the channels through which trade reform could bring benefits are broadly the followings: improved resource allocation; access to better technologies, inputs and intermediate goods; economies of scale and scope; greater domestic competition; availability of favorable growth externalities like transfer of know-how and many others.

Theoretically, reform towards international trade liberalization could affect (positively or negatively) individual local firms in four major ways:

• by increasing competition: lower import tariffs, quotas and other non-tariff barriers have the effect of increasing foreign competition in the domestic market, and this is expected to push inefficient/unproductive local firms to try to improve their productivity by eliminating waste, exploiting external economies of scale and scope, and adopting more innovative technologies, or to shut down. Openness of an economy to international trade is also seen as increasing plant size (i.e. scale efficiency), as local firms adopt efficient technologies, management, organization, and methods of production

• by lowering production costs due to cheaper imported inputs: local firms benefit from lower input costs, thereby allowing them to compete more effectively in both domestic markets against imports and in export markets;

• By increasing export opportunities: opening up to international competition will not only induce increased efficiency in domestic firms but it will also stimulate their exports;

• By reducing availability of local inputs: eliminating export restrictions on unprocessed raw materials will increase export of the items at the cost of local industries.

In Indonesia, within many existing studies on SMEs in the country, perhaps the only evidence on the effects of trade reforms before the 1997/98 economic crisis on SMEs’ exports is from a field study conducted by Berry and Levy (1994). They surveyed 91 SME exporters in three sub-sectors of manufacturing, and conducted intensive interviews with 30-40 public and non-profit agencies active in SMEs issues between January and June 1992. The three sub-sectors were garment in Jakarta and Bandung (both are in West Java), rattan furniture in Jakarta and Surabaya (East Java), and carved wooden furniture in Jepara (Central Java). From a total of 33 interviewed rattan product exporters, they found that all but one of the firms sampled exported 90% or more of their output, and 26 of 33 firms began exporting the same year they entered into production. Most of them started to export or increased their export share in their total production since the Indonesian government imposed bans on the export of unprocessed and semi-processed rattan in 1986 and 1988-89 respectively. So, it seems that the ban has been a key factor leading to a major expansion in rattan furniture exports of Indonesia’s SMEs.7Indeed, there are many cases, though unfortunately no official data are available, showing that free exports of raw materials have created difficulties for SMEs.

2. Effects of Investment Liberalization on SMEs

As with trade liberalization, investment liberalization should also take into consideration what impact (positive and negative) would have on the SMEs. Theoretically, investment liberalization affects SMEs in a number of ways.
On the positive side, a better investment environment generates many new firms or/and encourage existing firms (including SMEs) to expand their production capacities. The expansion of local SMEs can also take place with direct link to LEs, including MNCs/FDIs through e.g. subcontracting production linkages (‘complementary effect’).

On the negative side, however, reform towards FDI liberalization has the effect of increasing new LEs at the cost of existing SMEs unable to compete (‘competition effect’). Thus, ‘complementary effect’, rather than ‘competition effect’, can be considered to minimize the negative impact of investment liberalization on SMEs. SMEs in Indonesia, it is hard to say whether the long-term gradual process of investment liberalization, started first by the introduction of Foreign Direct Investment Law in 1967 marking the beginning of the openness to FDI, and followed by the ‘real’ liberalization with the introduction of various incentives to attract FDI (including more sectors open for FDI) in the second half of the 1980s and reached the climax after the crisis 1997/98 with the IMF Reform Agreement, has created complementary net effects or competition net effects on local SMEs.

FDI is an important source of technology transfer to local firms in developing countries,16suggesting that investment liberalization will also act as a stimulus for local SMEs from this perspective. Based on his study on the role of FDI in the so-called Newly Industrializing Countries (NICs) such as South Korea, Taiwan, Hong Kong, and Singapore, Soesastro (1998) states the following: there is no doubt that FDI plays an important role in cross-border flows, transfers and the diffusion of technology.