Geared up for free trade<\/p>\n
President Soeharto was not exaggerating when he cautioned at
\nthe opening of a bazaar in the National Monument park on Monday
\nthat the national economy will be in great danger if the people
\ncontinue to prefer foreign-made goods. He is right because it is
\nconsumer demand that fuels the growth of the manufacturing
\nsector, thereby creating jobs and providing earnings for the
\npeople to buy more goods.<\/p>\n
The President was obviously hinting at a possible impact of
\ntrade liberalization in the ASEAN region in the year 2003 and in
\nthe Asia-Pacific region by 2020 when foreign goods may flood the
\ndomestic market as import tariffs will be cut to a maximum of 5
\npercent and almost all non-tariff barriers will be abolished.<\/p>\n
Indonesia, with an estimated population of 195 million people,
\nis at present one of the most attractive target markets for
\nforeign companies, notably those in the seven-country ASEAN Free
\nTrade Area (AFTA). The purchasing power of the people will
\nsteadily increase as the annual economic growth target is at
\nleast 6 percent for the next two decades, and the country will
\nbecome a huge market for all categories of goods and services.<\/p>\n
The huge market, instead of creating opportunities for the
\ndomestic manufacturing sector, might most benefit the producers
\nfrom the other six countries of ASEAN if, as the President
\nforewarned, people continue to prefer foreign-made products.<\/p>\n
The biggest challenge, therefore, is to make the people buy
\ndomestic products. Simply appealing to consumers' sense of
\nnationalism by reminding them of the devastating impact of the
\ndomestic market being dominated by foreign products, will not be
\nsufficient to promote local products. The President himself,
\nthough stressing the need to educate consumers to appreciate
\ntheir own products, also urged industrial firms to improve
\nquality and distribution networks. In fact, the educational
\ncampaign to inculcate a high sense of appreciation among the
\npeople towards home products should be conducted simultaneously
\nwith marketing promotions by domestic producers.<\/p>\n
Marketing promotions, in their broadest sense, require
\nindustrial firms to keep themselves appraised of consumer
\npreferences, to maintain steady supplies, through efficient
\ndistribution networks, with consistent quality and reasonable
\nprices, and to provide reliable after-sales services.<\/p>\n
The seven years remaining before AFTA becomes fully
\noperational are still adequate for our industrial firms to gear
\nup for the fiercer market competition they will face. But they
\nmust start their preparations right now. They should realize that
\nafter the year 2003 the Indonesian market will become an ASEAN
\nmarket in terms of competition. The intensity of the market
\ncompetition will further increase in the year 2020 with the start
\nup of the Asia Pacific free trade area.<\/p>\n
We think common business sense will prompt consumers to prefer
\nlocal products provided they are on a par with foreign goods in
\nterms of quality and price and as long as the domestic suppliers
\nconsistently provide all the basic services needed to maintain
\nloyal customers. Simply in terms of distance, for example, the
\ndomestic suppliers are already in an advantageous position over
\nforeign suppliers with regards to transportation costs and speed
\nof delivery.<\/p>\n
The latest worrying trend, whereby imports of consumer goods
\nhave increased sharply, albeit from a low volume base, provides a
\nstrong warning to domestic companies that they need to step up
\ntheir internal reform in order to improve their overall
\ncompetitiveness. However, these companies do not work in a
\nvacuum. That means the government should do its share of creating
\na conducive climate for sound business development. Put another
\nway, the bureaucratic and regulatory environment in Indonesia
\nshould be as pro-business as it is in the other ASEAN countries.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/geared-up-for-free-trade-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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