Example for APEC members<\/p>\n
Two significant approvals by the House of Representatives
\n(DPR) last week deserve more praise than they were given.<\/p>\n
One was the decision to amend the 10-year-old taxation system.
\nThe amendments will basically expand the functions of this
\ncountry's taxation system beyond its previous revenue providing
\nand income redistributing functions, to include resource
\nreallocation.<\/p>\n
The other was its approval to ratify the establishment of the
\nWorld Trade Organization (WTO) which will administer the new
\nGeneral Agreement on Tariffs and Trade (GATT), hopefully by
\nJanuary next year. This ratification basically will thrust
\nIndonesia further into the global, open and competitive market
\neconomy.<\/p>\n
The two approvals complement each other.<\/p>\n
The new taxation system will provide an additional tool to
\nengineer the country's economy in coping with the ever-growing
\ndomestic, socio-economic requirements, as well as adapting to the
\nfast-changing external economic conjunctures.<\/p>\n
The WTO ratification will allow more Indonesian exports to
\nenter the markets of industrialized countries, while at the same
\ntime it will require more opening of the country's market economy
\nto global competition, which will consequently make it more
\ncompetitive in the global arena.<\/p>\n
Both are basic prerequisites for Indonesia if it hopes to
\nachieve its not-too-ambitious development goals as set out by
\nPresident Soeharto for the next 25 years. Quadrupling today's per
\ncapita income to around US$2,660 by the year 2019, or eradicating
\npoverty completely within the next decade, are no simple tasks.
\nBut they are not impossible to achieve, if this country could
\nbenefit from the huge resources and market potential provided by
\na more open global economy.<\/p>\n
The new GATT was signed by some 125 countries in Marrakesh,
\nMorocco, in April after more than seven years of tough
\nnegotiations - known as the Uruguay Round - on freer trade of
\ngoods and services. It will replace the \"old\" GATT, set up in
\n1948 as a temporary body pending the creation of an International
\nTrade Organization (ITO).<\/p>\n
Some estimates project the total global value of the trade
\nliberalizations at an annual US$755 billion in additional trade
\nby the year 2002 as a result of the new GATT. That goal however,
\nwill not materialize if the signing of the new GATT is not
\nfollowed up by the required ratification by member countries'
\nlegislatures. According to the latest data available, so far only
\n26 member countries have ratified the agreement. Many others are
\nstill deliberating on the ratification, wrongly concerned about
\nthe possibility of WTO becoming a super-government empowered to
\nmake decisions that are legally binding on member countries even
\nif made against their will. Not a few seem to be stalling in the
\nhope of squeezing more from their trading partners while
\nsimultaneously letting off less from themselves.<\/p>\n
And even more discouraging, most major trading powers like the
\nUnited States, Europe and Japan have not ratified the agreement.
\nIt is ironic since the U.S. has been such a driving force since
\nWorld War II for free trade. And it reminds one of the fate of
\nITO which was sunk by U.S. congressional opposition.<\/p>\n
It won't be easy either for Indonesia to accommodate the full
\nimplications of the new GATT. Several points of the Marrakesh
\nDeclaration, as pointed out by Minister of Trade Satrio B.
\nJoedono after the signing of the agreement, do not meet
\nIndonesian expectations. Indonesia however, cannot afford to miss
\nthe vast opportunities offered by the agreement, which among
\nothers opens the door for the country to become the fifth largest
\neconomy in the world by the year 2020 in terms of gross domestic
\nproduct at purchasing-power parity as estimated by the World
\nBank.<\/p>\n
It is more than justified for Indonesia to thrust this
\nratification as a good example for other members of the Asia
\nPacific Economic Cooperation (APEC) forum, which will hold its
\nsecond leadership meeting in Bogor, West Java, next month.<\/p>",
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"sponsor": "Okusi Associates",
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