FOR AFTA SUPPLEMENT Jan 31---
\nCHECKED
\nCHECKED 29 JAN
\n;JP;HEN;
\nANPAf..r..
\nAFTA-trade-speakup<\/p>\n
JP\/ \/<\/p>\n
It offers golden opportunity, but ...<\/p>\n
The Jakarta Post<\/p>\n
Many of Asia's protected industries are way beyond the infant
\nstage, when they arguably needed special nurturing. Yet some
\nstill cling to protectionist tariffs like an overgrown child to a
\nsecurity blanket. Take the latest grumbling about the ASEAN Free
\nTrade Area (AFTA), which aims to liberalize trade in the 10-
\nnation grouping. Despite a recent agreement by ASEAN economic
\nministers to extend the schedule to 2002 from the original target
\nof 2008, threats of delays lurk. Businessmen and government
\nofficials have generally agreed on the importance of developing
\nASEAN as a common market and single production base for member
\ncountries. However, they disagreed on when the trade pact should
\nbe fully realized. Below are some of their comments related to
\nthe free trade agreement.<\/p>\n
Aburizal Bakrie, chairman of the Indonesian Chamber of
\nCommerce: Indonesia needs to pull back from AFTA because the
\ncurrent domestic economic situation isn't yet conducive to such a
\nmove.<\/p>\n
It is not the right moment to fully implement free trade
\nliberalization in the region this year, although the region's
\neconomy needs AFTA to benefit from the rising business
\nopportunities in the region.<\/p>\n
The unified ASEAN market will, in fact, create opportunities
\nto increase exports and to attract foreign investment. With lower
\nlabor costs, Indonesian exporters are in the best position to
\ntake advantage of relaxed tariffs in the region. And the threat
\nof damage to local business is actually limited. Only 15 percent
\nof Indonesia's imports come from ASEAN countries, representing
\nabout 2 percent of GDP. It is only a matter of time. Indonesia is
\nnot yet ready. Four business sectors, automotive, chemical,
\nretail and food industries, for example, could lose from the free
\ntrade agreement.<\/p>\n
For that reason, the government should be more flexible, by at
\nleast placing the four business sectors on the so called
\nTemporary Exclusion List.<\/p>\n
As Indonesia is still in a difficult situation, it should be
\ngiven more time to enter the free trade agreement.<\/p>\n
Rini Soewandi, Minister of Industry and Trade: Although not
\nall Indonesian business sectors are ready to fully implement the
\nfree trade agreement, adopting the free trade agreement is not
\nreally a problem for some sectors.<\/p>\n
The trade pact has been implemented since 1992 by a gradual
\nreduction of import tariffs of respective member countries. It
\nhas also become a common commitment between business players and
\nthe government to stick to the trade agreement. Due to the
\neconomic crisis, many industries have called on the government to
\ndelay the full implementation of the free trade commitment until
\nthey fully recover. It is understandable then if some companies
\nare worried. But from my observation, many industries are ready
\nto implement the free trade deal. Of course, some industries
\nmight lose and there are also others that will win.<\/p>\n
The fact that some ASEAN countries have imposed non-trade
\nbarriers to protect their goods despite their full commitment to
\nthe trade pact is normal. It is common -- even the European
\nCommunity imposes, for example, a non-tariff barrier on
\nIndonesian goods. The most important thing is that we have to
\nfind the solution.<\/p>\n
Indonesia's non-oil exports to other members of ASEAN are
\nstill relatively small, indicating that Indonesian companies have
\nyet to pay serious attention to increasing their trade in the
\nregion. The regional market is still relatively untapped by
\nIndonesian companies.<\/p>\n
Indonesia has no choice but to adopt the pact; if not, it will
\nbe left behind by other ASEAN member countries. Indonesian
\ncompanies should, therefore, be aware of the need to improve the
\nquality of their products and to promote their efficiency. If
\nnot, Indonesia will be flooded by goods from other ASEAN members,
\nrather than getting a bigger slice of the expanded market.<\/p>\n
Martha Tillar, the founder and chairperson of cosmetics
\nproducer Martha Tillar Group: The free trade accord offers a
\ngolden opportunity for companies in the region to raise their
\nexports in the expanded market.<\/p>\n
With the free trade agreement, ASEAN will become a single
\nmarket for the region's companies. We no longer talk of
\nIndonesia's 210 million people, but the whole region's
\npopulation.<\/p>\n
There is no exception. All the business players in the region
\nshould prepare themselves if they want to benefit from the
\nexpanded market. However, in order to take advantage of the wider
\nbusiness opportunities, every single company in the region should
\nbe able to offer products with superior quality. Otherwise, the
\ntrade agreement will only create a nightmare for them.
\n Erwin Elias, a member of the council for the development of
\nsmall-scale export-oriented companies (UKM): As long as there is
\nno market distortion, Indonesian small-scale exporters will find
\nthe free trade agreement to be an opportunity to expand their
\nforeign markets, particularly in ASEAN.<\/p>\n
A market distortion, such as unofficial levies, has become a
\nclassic problem for Indonesian companies in competing with
\nforeign producers. Such market distortions have eliminated the
\ncompetitive edge of local products. In addition to the market
\ndistortions, financial institutions such as banks still lack a
\ncommitment to providing credits to small-scale companies. The
\nbanks' requirement that Jakarta-based assets be provided as the
\ncollateral to obtain loans is an example of the banks' half-
\nhearted treatment of small companies.<\/p>\n
Achmad Saifun, the chairman of the federation of car parts
\nproducers (GIAM): The issue related to the AFTA is not new at
\nall. It was approved by member countries a long time ago. ASEAN
\nmember countries have also agreed to speed up the process of
\nreducing import tariffs within the region to 0-5 percent this
\nyear, instead of 2008 as originally agreed. This is a long term
\nprocess, which should have been followed by all business players
\nin the region. For Indonesian auto-related companies, the free
\ntrade agreement adopted by the 10 ASEAN nations should be
\nregarded as a light exercise before entering a wider scope of
\nfree trade agreements such as those implemented under the World
\nTrade Organization (WTO).<\/p>\n
In the case of AFTA, Indonesian companies are given the
\nopportunity to compete with rivals of the same class before being
\nengaged in a real fight on the global free trade market.<\/p>\n
Lily Yuliani, a wood handicrafts producer: Small companies,
\nwhich are mostly located outside Jakarta, have become easy prey
\nfor corrupt government officials. How could they compete with
\nforeign producers if they have to pay various kinds of payments
\nto almost all government institutions. It is really burdensome
\nbecause the money spent on such payments is quite large. To
\nobtain a license, for example, we have to pass through all levels
\nof government agencies from the head of the village to those at
\nthe regency and provincial levels, and sometimes we have to go to
\nJakarta. It costs a lot of money for small firms, which mostly
\nreceive a slim margin from their export activities.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/bfor-afta-supplement-jan-31-b-1447899208",
"image": ""
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