The government is considering pushing forward safeguard measures to protect domestic industries, with tariff barriers no longer effective due to the upcoming implementation of a number of FTAs.
Indonesia, under the ASEAN framework, signed an FTA with China that will take effect on Jan. 1, 2010. An FTA with India has also just been signed recently, in addition to the Indonesia-Japan Economic Partnership Agreement (EPA), which is a wider version of an FTA - all have prompted concern over Indonesia’s domestic industries.
Ansari Bukhari, the Industry Ministry’s director general for metal, machinery, textile and miscellaneous industries, said Friday a number of local manufacturers had asked the government to expedite a safeguard investigation process.
“There will be an issue, when protection in the form of tariffs will no longer be effective, whether because of an FTA involving ASEAN or otherwise,” he said.
“We’ll learn how to optimize, for example, safeguards. We see today that the process [for safeguard proceedings] may take almost nine months, which is too long.”
Safeguarding is expected to help protect domestic manufacturers from serious fallout or collapse,
direct or indirect, caused by a jump in imports of similar products manufactured by overseas
Ansari said safeguards could be imposed if there was evidence that a surge in imports of particular goods had led to loss of business for a domestic manufacturer of that same good.
He added an investigation into such a case and time for the safeguard to take effect should now take no more than three months.
Last month for instance, the Indonesian Trade Protection Committee (KPPI) concluded that a leap in imports of nails and wire rods from China, Taiwan and Malaysia had dented local manufacturers’
But although the KPPI has wrapped up the investigation, which took approximately a year, and recommended the Finance Ministry impose a safeguard, no measures have been taken so far.
Indonesia has so far imposed safeguard on ceramic imported from China, Malaysia and Hong Kong.
Besides safeguards, other protective measures available include anti-dumping, anti-subsidy and
Indonesian National Standards (SNI) requirements, all of which the government can implement
to bar excessive imports that could put local manufacturers out of business.
Concerns over an influx of cheap imports have mounted as the ASEAN-China FTA gets set to go into effect on Jan. 1 next year, after its signing in 2004.
The FTA will gradually scrap import duties on, among others, textiles, footwear and leather products, ceramics, food and beverages, iron and steel products, petrochemicals and electronics shipped out from China.
Even before the implementation of the FTA, the Indonesian market has already seen an influx of imported Chinese products that have waylaid domestic players, domestic manufacturers claim.
Industry Minister Fahmi Idris said he would ask President Susilo Bambang Yudhoyono to delay the implementation of the China FTA.
Many business groupings have voiced their concern over the FTA.
One of them is the Indonesian Textile Association (API), whose deputy chairman Ade Sudrajat,
had previously said textile imports from China “may double” from some US$900 million to $1.8 bil-
lion once the FTA became effective as smuggling would no longer be necessary and thus, illegal
Chinese textiles would become “legal”.
The $900 million represents 15 percent of the $7 billion total domestic textile market.