INDONESIA'S ECONOMIC DIPLOMACY STRATEGY TO TOYOTA MOTOR CORPORATION IN THE POLICY OF LOCAL CONTENT REQUIREMENTS IN THE NATIONAL CAR INDUSTRY POST-REFORMATION

Abstract

Along with cease of purpose a national car, the policy of using local components/Local content requirements (LCRs) in the national car industry put forward by the Government appears to be the most significant breakthrough to increase sustainable added value for the national economy now and in the future. Research question is how economic diplomacy of Indonesian Government can implement domestically and bilaterally towards Toyota Motor Corporation (TMC) and Japan in order to optimize the LCRs policy in automotive sector at the present time. This paper based on a qualitative approach discuss the phenomenon by literature review from document and journal. Theory used in this paper is foreign policy and economic diplomacy. Besides of continuously encouraging growth, foreign car manufacturers, including Multinational Corporations (MNCs) from Japan such as the Toyota Motor Corporation (TMC) which has a market share of more than 36%, support the program that initiated by the Indonesian government in the post-Reformation period through this Domestic Component Level (TKDN) tag line. Various ideas of experts as well as the findings produced by scientists who are concerned with this issue, the success achieved by the Government so far cannot be separated from the existence of economic diplomacy carried out by taking into the wide expanse of dynamics which includes domestic economic conditions, bilateral and multilateral affairs. Therefore, analyzing the case of the LCRs policy in the TMC during the Reformation era, shows the existence of the Indonesian Government's economic diplomacy strategy towards TMC that it conducted domestically and bilaterally by taking crucial factors such as the condition of the large Indonesian automotive market, the WTO ‘less powerful’ trade regime, as well as the characteristics and interests of Japanese MNCs towards the automotive manufacturing industry in Indonesia.

Keywords:
Local Content, Foreign Policy, Economic Diplomacy, Car Industry, Toyota Motor Corporation