Free trade set amid protection talk<\/p>\n
JAKARTA (JP): The government continues to brush aside debate
\nover the proposed tariff protection for a US$1.7 billion olefin
\nplant, but has reaffirmed its determination to implement a free
\ntrade system.<\/p>\n
\"We have discussed with the President our preparations for
\nfree trade as called for by the Bogor Declaration of APEC leaders
\nand for a new multilateral trading system under the World Trade
\nOrganization (WTO) treaty,\" Coordinating Minister of Industry and
\nTrade Hartarto told reporters after a meeting with President
\nSoeharto yesterday.<\/p>\n
Hartarto was accompanied by Minister of Trade Satrio B.
\nJoedono, Minister of Industry Tunky Ariwibowo and Minister\/State
\nSecretary Moerdiono.<\/p>\n
The Bogor Declaration, drafted by Indonesia, was adopted by
\nthe leaders of the 18 member economies of the Asia Pacific
\nEconomic Cooperation (APEC) forum in November.<\/p>\n
The Declaration, although legally non-binding, aims to create
\nthe largest free trade zone in the world. It stipulates that its
\ndeveloped member economies members should adopt free and open
\ntrade and investment by 2010 and the emerging ones by 2020.<\/p>\n
The APEC members are scheduled to hold another forum in Osaka,
\nJapan, next November.<\/p>\n
Indonesia also signed and ratified the WTO treaty last year.
\nThe treaty stipulated that signatories must lower tariffs and
\neventually abolish all non-tariff barriers by early next century.<\/p>\n
\"We hope to reach a decision in Osaka on how the Bogor
\nDeclaration is to be implemented,\" Hartarto said.<\/p>\n
Hartarto said that Indonesia must take full advantage when the
\ndeveloped members of APEC fully liberalize their trade and
\ninvestment in 2010.<\/p>\n
\"By that time there will be a faster restructuring of the
\ndeveloped nations' economies. This will prompt them to increase
\ntheir investments in the emerging economies including Indonesia,\"
\nthe minister added.<\/p>\n
The country registered a record level of approved foreign
\ninvestment in 1994 of US$23.7 billion, more than double the 1993
\nlevel.<\/p>\n
Chandra Asri<\/p>\n
Hartarto, who was recently appointed as the chairman of the
\ncountry's tariff task force, declined yesterday to elaborate on
\nthe status of the proposed tariff protection for PT Chandra Asri
\nPetrochemical Center's olefin plant.<\/p>\n
\"We are still assessing the proposal,\" he said.<\/p>\n
Hartarto, while stating that Chandra Asri executives had not
\nformally submitted their proposal for protection, said that
\n\"protection is possible as long as it does not adversely affect
\nthe downstream industries.\"<\/p>\n
Debates on protectionism surfaced when Chandra Asri executives
\nurged the House of Representatives in early December to support
\ntheir proposal for the imposition of up to 40 percent import
\ntariffs on olefin products, the basic materials for plastics.<\/p>\n
Chandra Asri is controlled by the Napan Group, Barito Pacific
\nGroup and Bimantara Group, all of which are believed to have
\nstrong political connections.<\/p>\n
Advocates of the olefin project have argued that the proposed
\nprotection will not harm downstream industries and is consistent
\nwith Indonesia's free trade commitments.<\/p>\n
While it is not clear whether tariff protection had been
\naccounted for in the feasibility study on the olefin project,
\nproponents of Chandra Asri have called the project a \"measurement
\nof national pride.\"<\/p>\n
The controversy over the proposed protection intensified when
\nMinister of Finance Mar'ie Muhammad, who opposed tariff
\nprotection for the olefin project, was later replaced by
\nHartarto.<\/p>\n
The olefin project, financed mostly by foreign loans, has
\nbecome a controversial issue ever since its pre-development
\nstage. The government, anxious about the widening current account
\ndeficit, ordered in 1991 that all major projects, including the
\nChandra Asri olefin project, be shelved.<\/p>\n
The project was, however, revived in 1992 after it was
\nrestructured into a wholly foreign-owned venture, thereby ducking
\nlegal restrictions on overseas borrowings by Indonesian
\ncompanies. (hdj)<\/p>",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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