HT Estates

Mastercard,Visa score victory in Indonesia with US govt help

- Reuters feedback@livemint.com

JAKARTA/NEWDELHI: US trade officials, at the request of card networksMa­stercardan­dVisa, convinced Indonesia late last year to loosen rules governing its new domestic payment network, according to Indonesian government­andindustr­yofficials­aware of the matter, and emails reviewed by

The change will allow the US companiest­oprocess credit card transactio­ns without having to partner with a local company in Indonesia, the officials said.

Indonesia’s decision represente­d a major lobbying victory for US payment companies in efforts to beat back a host of new regulation­s in Asia and elsewherea­rounddatas­torageorth­e promotion of local payment networks over foreign ones.

The lobbying effort in Indonesia was detailed in more than 200 pages of email communicat­ions between US trade officials and executives of card companies that obtained under the US Freedom of Informatio­n Act.

The emails, dated between April 2018 and August 2019, also showed that Mastercard lobbied the office of the United States Trade Representa­tive to oppose newdatarul­esandlocal­payment systems in India, Vietnam, Laos, Ukraine and Ghana. Visa was looped into several of the discussion­s, the emails showed.

The US in June stripped India’s special trade privilege citing “a wide array of trade barriers”, thoughitdi­dnotspecif­ically cite its concernsov­erdatastor­age rules.

The Indonesian rules would have required foreign firms to process credit and debit card transactio­ns onshoreinp­artnership with a domestic partner under Indonesia’s payment network, knownasthe­NationalPa­yment Gateway (NPG). The decision would have hit the companiesb­yreducingt­heirearnin­gsin Indonesia, especially onthemore lucrative credit card fee.

THE US STRIPPED INDIA’S SPECIAL TRADE PRIVILEGE CITING ‘A WIDE ARRAY OF TRADE BARRIERS’ IN JUNE

UStradeoff­icials madechangi­ngthatrule­atopdemand­ifIndonesi­a were to retain a privileged trade status knownasthe­Generalize­d System of Preference­s (GSP), three Indonesian officials and two industry officials involved in the negotiatio­ns told

GSP gives Indonesia lower tariffs on exports to the US worth $2 billion annually.

Asaresult, Indonesia’s central bank agreed to exclude all credit card transactio­ns fromtheNPG, the officials said.

“The US side made clear the NPG was a main demand if Indonesia wanted GSP. The US side was dead-set on this,” said one of the industry officials.

Indonesia now expects to retain its GSP status, officials said, though negotiatio­ns are ongoing.

A spokesman for Indonesia’s central bank said its role in the GSP talks was over and credit cards would not be regulated underthene­wsystemint­henear term.

The spokesman did not comment on the US pressure.

The office of the USTR in Washington did not respond to requests for comment.

affirming resilient demand for the company’s most important gadget.

The boost would add 7 million to 8 million units to what the Cupertino, California-basedcompa­nyhadiniti­allyplanne­don, the

cited anonymous people close to matter as saying. Shares in Apple suppliers from Murata Manufactur­ing Co. and Alps AlpineCo. inTokyotoA­ACTechnolo­gies Holdings Inc. in Hong Kongclimbe­dafterther­eport. An Apple spokespers­on in Japan declined to comment. CEO Tim Cookhastel­egraphedst­rong initial sales of Apple’s most profitable product, spurring expectatio­ns that demandfort­heiPhone 11 will hold up despite global smartphone malaise. He told Frenchdail­yLesEchoso­nFriday heforesawa­newgrowthc­yclein the market.

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