AFTA: A wake-up call for RI business<\/p>\n
A'an Suryana and Fitri Wulandari, The Jakarta Post, Jakarta<\/p>\n
Ira Murweni, a 34-year old housewife, strolled along an aisle in
\na supermarket in South Jakarta. To meet her family's needs, she
\ngoes shopping at least twice a month.<\/p>\n
She recalled an interesting discovery.<\/p>\n
\"Since the beginning of last year, the price gap between
\nimported and locally made products has shrunk,\" Ira observed.<\/p>\n
Susanna Merry, a 35-year-old housewife living in Bekasi, had a
\nsimilar view.<\/p>\n
According to her experience, shampoo made in Thailand, for
\nexample, was priced at Rp 6,000 (about 70 U.S. cents) for a small
\nbottle in supermarkets here, while her favorite, locally produced
\nbrand is Rp 17,500.<\/p>\n
She added that she could also find Thai-made clothes, which
\nare less expensive than locally produced clothes, at Mangga Dua,
\na popular shopping center in Central Jakarta. not West or North
\nJakarta?.<\/p>\n
She acknowledged that the quality of the imported products was
\ngood enough for her, and for a thrifty housewife like herself,
\nprices always mattered.<\/p>\n
\"I'm delighted about buying these imported goods, because the
\nprice is more attractive and the quality adequate,\" she said.<\/p>\n
Indonesia is now indeed under attack by foreign goods.
\nImported juice, rice, domestic appliances and even small items,
\nsuch as needles, nails and others, can easily be found in
\nsupermarkets throughout the country.<\/p>\n
You may even find them along sidewalks, right below your very
\nnose -- at the Slipi intersection, on Jl. Matraman Raya, in
\nGlodok and at other places in Jakarta. Foreign products, from
\nChina to Malaysia, are abundant, and much more competitive than
\nlocal products.<\/p>\n
Inexpensive? Yes. Quality? Adequate.<\/p>\n
This new trend should be warmly welcomed by consumers, who are
\nalways on the lookout for better prices. But, for local
\nproducers, who have always had a tough time competing with
\nimported products, the influx of imported goods has made their
\nlives even tougher.<\/p>\n
Whether this new \"Asian invasion\" was due to the ASEAN Free
\nTrade Area (AFTA), or smuggling, was not clear.<\/p>\n
However, as far as the products that are imported from ASEAN
\nmember countries are concerned, the first explanation seems more
\nplausible.<\/p>\n
The influx of goods from ASEAN countries started in January,
\nwhen AFTA was launched \"softly\". By Jan. 1, 2002, Indonesia had
\ncut import tariffs on more than 90 percent of 7,137 products in
\nthe AFTA inclusion list to 5 percent or lower.<\/p>\n
Only tariffs on the remaining 69 products, mostly chemical and
\nplastic products, were kept above 5 percent.<\/p>\n
Yet, Indonesia must also cut the tariffs on the remaining 69
\nproducts to 5 percent or lower by Jan. 1, 2003, in line with the
\nAFTA agreement. Under AFTA, which was first conceived in 1993,
\nthe six founding members of ASEAN -- Indonesia, Singapore,
\nMalaysia, Thailand, the Philippines and Brunei Darussalam --
\npromised to reduce import tariffs on all products in the
\ninclusion list to zero percent to 5 percent in 2003.<\/p>\n
Newer ASEAN member states -- Vietnam, Cambodia, Laos and
\nMyanmar -- will implement AFTA between 2006 and 2010.<\/p>\n
Local companies, which were troubled by imported goods even
\nbefore AFTA was completely implemented, now see more danger ahead
\nwith 2003 only a few days away.<\/p>\n
Some businesspeople in the country have complained that the
\ngovernment's move to reduce tariffs was too hasty. According to
\nthem, local industries were not yet ready to enter the AFTA era.<\/p>\n
For example, president director of PT Indomobil Sukses
\nInternational Gunadi Sindhuwinata said that the government should
\nnot have complied with AFTA on automotive components by 2002,
\ngiven that Malaysia and Thailand were still allowed to impose
\nhigher tariffs.<\/p>\n
Malaysia is set to reduce tariffs on automotive components to
\n5 percent in 2005 and Thailand will do so in 2003.<\/p>\n
\"Indonesia did it (reducing tariffs on automotive components)
\nin 2002. It has meant losses for us at a time when the country's
\nautomotive industry is still struggling under the weight of the
\nfinancial crisis,\" he said, adding that the lower tariffs had
\nsparked off an increase in imported automotive components to
\nIndonesia.<\/p>\n
Farchad Poeradisastra, director of PT Ciracasindo Perdana, the
\nproducer of SunFresh juice, agreed, saying that the poor
\ninvestment climate in Indonesia had weakened local producers'
\ncompetitiveness under the AFTA scheme and had made Indonesian
\nproducts easy targets for foreign goods.<\/p>\n
\"Our production costs have soared because we also have to meet
\nhigher and higher labor costs, illegal 'fees' to officials and a
\nlot of double taxation: taxes on luxury goods and tariffs on the
\nimported juice ingredients,\" said Farchad.<\/p>\n
He lamented the fact that all the other ASEAN countries were
\nbetter places to invest, as they allowed producers to work more
\nefficiently and to make their products more competitive, compared
\nwith Indonesian-made products.<\/p>\n
Many businesses from all sectors have roundly criticized the
\ngovernment for not better preparing local manufacturers for AFTA.
\nThis, they said, was clearly evidenced by the fact that the
\ngovernment had not published any information about the list of
\nitems included in AFTA.<\/p>\n
At a recent meeting of the Association of Soft Drink
\nManufacturers, for example, several members of the association
\nconceded that they were entirely in the dark on which goods were
\nincluded on the AFTA list.<\/p>\n
\"AFTA will certainly hurt local businesses,\" Farchan, an
\nassociation spokesperson said.<\/p>\n
However, he added, the government could act to contain the
\ndamage by striving to create a good investment climate for
\ninvestors, both local and foreign, and by fighting to defend the
\ninterests of local companies in regional talks.<\/p>\n
\"In these talks, the government should be more aggressive and
\nsometimes say no to proposals for imposing a free-trade scheme on
\nIndonesian goods, if we feel our products are not ready for it,\"
\nhe said.<\/p>\n
\"If the government fails, local businesspeople will simply
\nbecome traders rather than manufacturers in the future. They will
\nsimply import goods and sell them here,\" warned Farchad, which
\nwould mean massive closures of manufacturing plants that employ
\nmillions of local workers.<\/p>\n
\"Indonesia still desperately needs people who want to be
\nproducers rather than mere importers, because the manufacturing
\nsector creates many job opportunities,\" he added.<\/p>\n
\"If local producers scrapped their domestic manufacturing
\nplants and started importing and trading foreign goods, and local
\nconsumers preferred buying foreign products, it would mean that
\nwe, as Indonesians, would be mostly supporting the livelihoods of
\nforeigners, and not the children of our own nation,\" Farchan
\nconcluded.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/afta-a-wake-up-call-for-ri-business-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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