Sat, 09 Jan 2010
Business associations blame Indonesia's unreadiness to face the ASEAN-China free trade agreement (FTA) on the poor quality of infrastructure.

The chairman of the Indonesian Motorcycle Industry Association, Gunadi Sindhuwinata, said Friday that infrastructure all across the country had remained unimproved although the FTA had been discussed 10 years ago.

"Good infrastructure is the key to cut unnecessary costs so that we can provide competitive prices against China's cheap products," Gunadi told The Jakarta Post.

However, he went on, no significant infrastructure improvement had been made.

The government's proposal to suspend the FTA might be useless, he said.

"It's already too late. The quality of our infrastructure is far behind China's.

"We can not rectify it in such short time. The government should have begun upgrading infrastructure since the FTA was first discussed 10 years ago," Gunadi said.

He acknowledged that the FTA might not significantly affect the domestic motorcycle industry. "But we still need to anticipate it," he said.

Separately, Poppy Dharsono, the chairwoman of the Indonesian Garment and Textile Producers Association, said that China's excellent infrastructure succeeded to trim its textile products by up to 56 percent.

"That was in the past, before the FTA cut the import tax tariffs. Can you imagine how cheap China's products will be due to the FTA?" she said.

Poppy said small and medium enterprises in China enjoyed the privileges of a 3 percent credit interest rate, far lower than the credit interest rate in Indonesian banks, which ranged from 14 percent to 16 percent.

"In addition to the excellent infrastructure, energy and services, prices in China are very low. That makes China's products very cheap," she said.

Poppy, who is also a member of Regional Representative Council (DPD), said that as many as 4.7 million small and medium enterprise workers in Central Java would likely have their income significantly reduced due to the FTA.

"The government should wake up and take concrete action immediately," she said. (bbs)



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