Tue, 29 Dec 2009
From: Antara News
By Aditya Suharmoko and Mustaqim Adamrah, The Jakarta Post, Jakarta
Ministerial regulations on full implementation of the free trade agreement between ASEAN and China (ACFTA) have been finalized, becoming effective Jan. 1 next year, the Finance Ministry said.

“Several Finance Ministry regulations will be completed today,” Finance Minister Sri Mulyani Indrawati told reporters Monday.

The ACFTA has met resistance from some local industries, which fear they may be unable to compete against cheap products from China. But it will still take effect in 2010 nevertheless, the government said.

The government has designed plans to protect local industries without violating any articles stipulated under ACFTA, Coordinating Minister for the Economy Hatta Radjasa said.

But he refused to elaborate on this on fears there could be trade retaliation by China. “We don’t want any unwanted counter [measures].”

Government and business associations have formed a team to anticipate the negative impacts resulting from ACFTA, said Sofjan Wanandi, chairman of the Indonesian Employers Association (Apindo).

The government and business want a review of 314 tariff lines covering eight sectors that will be cut to as low as to zero under ACFTA rules. These sectors include steel, textiles and textile products, electronics, footwear, furniture, organic chemical products, petrochemical products, foods and beverages.

The review will be undertaken within six months, said Sofjan.

Hatta said there is a request from domestic manufacturers for the postponement of the full implementation of several tariff lines.

The Industry Ministry submitted a proposal to postpone implementation of reductions on 228 tariff
lines to the Office of Coordinating Minister for the Economy on Wednesday.

The 228 tariff lines included 114 tariff lines concerning steel, 53 tariff lines affecting textiles, 10 tariff lines covering machinery, seven tariff lines affecting electronics, seven tariff lines covering basic inorganic chemicals, five tariff lines affecting petrochemicals and five dealing with furniture.

Indonesia Iron and Steel Industry Association (IISIA) executive director Hidajat Triseputro said the association previously proposed that 350 tariff lines needed to be postponed.

“HRC (hot rolled coil) and CRC (cold rolled coil) are the most urgent. If imports of those products continue, we’ll collapse,” he told The Jakarta Post, refusing to comment further as he had yet to know the details of the proposal.

Indonesian Textile Association (API) deputy chairman Ade Sudrajat said he welcomed the government’s proposals although the association had earlier proposed the postponement of over 100 tariff lines.

“This may be the best the government can propose, [in order] to compromise with their counterparts,” he told The Post.

Hatta acknowledged that the requests for postponement may be necessary to ease pressure on local industries. “We want a balance in our trade,” he said.

Hatta added that the government would improve the country’s lagging infrastructure to increase business competitiveness.

Poor infrastructure has resulted in a high-cost economy, which forces businesses to spend more on logistic costs. Analysts said the poor state of national infrastructure has caused the real sector to have relatively stagnant growth.

Mulyani shared the same opinion. She said last week that manufacturing industry should be revitalized to be able to compete with its counterparts.

“This means not only giving incentives or improving infrastructure. But governance should be improved too to avoid a high-cost economy,” she said.

A shorter time to set up a business is part of governance. Mulyani said to Bloomberg that the estimated time to establish a business here has been cut to 60 days from the previous 105 days a few years ago.



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