Indonesia turns protectionist

And their economy is only now slipping into trade deficit due to weakness in the Chinese economy. The net result may be even more protectionism down the road.

Chinese Firms to Invest $8.6b in Indonesian Smelters Ahead of Export Ban
The investment comes after a string of similar deals as China deepens its presence in Indonesia before the resource-rich nation implements a blanket ban on ore exports, slated for 2014.

Indonesia has in the past year tightened protectionist policies in the mining sector, obliging foreigners with new mining permits to divest a controlling stake in assets after 10 years of production.

It also imposed a 20 percent tax on raw mineral exports, and obliged ore exporters to invest in Indonesian smelters. Hidayat said the $8.6 billion investment would create 46,000 new jobs for Indonesians.

Indonesia isn't alone in their ban on exports (nor do they limit it to iron ore). India has similar laws:

India's moves to curb iron ore exports, mining
A two-year old ban on iron ore exports from Karnataka which has halved shipments from the world's No. 3 supplier will take centre stage at an industry gathering in Bangalore this week as pressure mounts to lift the restriction.

Notably, India imports a lot of Indonesia coal, as does China. Due to China's economic weakness, exports from Indonesia have dropped and the country has slipped into trade deficit. If China weakens considerably, by the time the hard ban takes effect in 2014, the government may have already changed the law to help support the industry.

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