RI's quiet entry into AFTA breeds free trade distrust<\/p>\n
Berni K. Moestafa, The Jakarta Post, Jakarta<\/p>\n
Marking its debut into the free trade era, Indonesia opened
\nits market on Tuesday to the ASEAN Free Trade Area (AFTA), but
\neconomists warned a lack of publicity about AFTA has given rise
\nto public distrust of the benefits of trade liberalization.<\/p>\n
With AFTA in effect now, six members of the Association of
\nSoutheast Asian Nations (ASEAN) have cut their tariff barriers on
\nmajor products to between zero and five percent.<\/p>\n
The five other countries are Brunei, Malaysia, Singapore, the
\nPhilippines and Thailand.<\/p>\n
By lowering tariff rates, ASEAN expects to force industries
\ninto boosting their trade competitiveness, and to lure investment
\ninto the region.<\/p>\n
After 10 years in the making, AFTA turned most of Southeast
\nAsia into a free trade area on Jan. 1, 2002.<\/p>\n
But in the run up to AFTA, little was heard of from the
\ngovernment to raise public awareness on the importance of AFTA.<\/p>\n
\"The government's publicity about AFTA has been overrun by
\nlocal free trade critics trying to protect their industries,\"
\nsaid Umar Juoro, an economist at the Center for Information and
\nDevelopment Studies (CIDES), on Tuesday.<\/p>\n
He said the government had failed to properly inform the
\npublic of the opportunities AFTA offered this country.<\/p>\n
State sponsored seminars on AFTA are few if not nonexistent.<\/p>\n
This lack of attention was evident in President Megawati
\nSoekarnoputri's new year speech, which did not even mention AFTA.<\/p>\n
\"They (the government) talk a lot about AFTA, and how we
\ncannot stop it from coming into effect. But they never get into
\nthe details of what AFTA can actually do,\" Umar said.<\/p>\n
With the government silent, he said, the public took its clues
\nfrom comments by the local business community, which were in
\ngeneral negative.<\/p>\n
Umar said the government should have come up with a strategy
\nfor industries to make the most of the benefits and opportunities
\noffered by AFTA.<\/p>\n
That way, he said, the government could have secured better
\ncooperation with the Indonesian Chamber of Commerce and Industry
\n(Kadin).<\/p>\n
Instead, Kadin has turned into a staunch critic of AFTA.<\/p>\n
The chamber recently issued a report claiming that 27 percent
\nof local products were unprepared to compete under AFTA.<\/p>\n
Yet the government said nearly 95 percent of the country's
\nindustries were already operating under AFTA import tariff rates.<\/p>\n
An economist at the Center for Strategic and International
\nStudies (CSIS), Hadi Soesastro said that as Indonesia's tariff
\nrates were almost compliant with AFTA, the actual beginning of
\nthe AFTA era would have a minor impact on Indonesia's industries.<\/p>\n
Nonetheless, he said, companies preferred to keep hiding
\nbehind trade protection rather than spending money to boost
\nefficiency.<\/p>\n
\"It's the same everywhere in the world: there is no other way
\nother than to force companies to boost their competitiveness,\" he
\nsaid.<\/p>\n
AFTA was first planned in 1992.<\/p>\n
At first, the six countries agreed on a January 2008 deadline,
\nbut decided to bring forward the date to 2003 and later to 2002.<\/p>\n
Hadi said that compared to the European Union (EU) market,
\nAFTA would have a smaller impact on the ASEAN market.<\/p>\n
Trade among EU member countries makes up 70 percent of their
\nentire trade activity, leaving only 30 percent in trade with the
\nrest of the world, he said.<\/p>\n
By contrast, intra-ASEAN trade made up only 20 percent of the
\nregion's entire trade activity. That means ASEAN countries depend
\nmore on rest of the world in trading their goods.<\/p>\n
Hadi said with ASEAN's high dependence on global trade, one
\nkey objective of AFTA was to raise the competitiveness of the
\nregion's products in the world market.<\/p>\n
Another important objective is to lure foreign investment into
\nthe region. The free flow of production goods among ASEAN
\ncountries is attractive to firms wanting to set up a global
\nproduction base, according to him.<\/p>\n
In that respect, ASEAN is competing against China, which
\nrecently made its entrance into the World Trade Organization
\n(WTO), and is attracting billions of dollars in investment.<\/p>",
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