95% of RI's tariffs already in line with AFTA: Official

Adianto P.Simamora, The Jakarta Post, Jakarta

The government said on Thursday that the country could no longer delay the full implementation of the ASEAN Free Trade Area (AFTA) as most of its tariffs had been reduced to comply with the regional free trade arrangement.

Director general for international cooperation at the Ministry of Industry and Trade Hatanto Reksodiputro said that 95 percent of the country's tariffs in the "Inclusion List" had been lowered to between 0 percent and 5 percent.

Under the AFTA scheme, which would start early next year, the six founding members of ASEAN -- Indonesia, Malaysia, Singapore, Thailand, Brunei Darussalam and the Philippines -- had to cut at least 90 percent of their tariffs to 0 percent to 5 percent in 2001.

By the year 2002, 100 percent of items on the inclusion list would have import tariffs of 0 percent to five percent, but with some flexibility.

"We can't back down, it will be useless ... We also have many strong products (to compete with foreign products)," Hatanto said.

The Chamber of Commerce and Industry (KADIN) earlier demanded the government delay the adoption of the AFTA scheme, as some "27 percent" of the local products were not yet ready to compete under the free trade regulations.

According to KADIN's survey, these products included coffee, steel, pipes, sugar, rice, machinery, electrical appliances, aluminum foil, cables, oil and gas products, paint and varnish products.

But Hatanto played down the concern, saying that many local businesses were ready to compete with their regional peers, and he also doubted the validity of KADIN's findings.

"For next year, there will be only 66 products that are still subject to an import tariff of more than 5 percent, mostly chemical products," Hatanto said.

Data from the ASEAN secretariat showed that Indonesia's total tariffs under the Common Effective Preferential Tariff (CEPT) agreement covered 7,286 items.

It consisted of some 7,192 items on the Inclusion List (IL), 21 on the Temporary Exclusion List (TEL), 4 on the Sensitive List (SL) and 68 on the General Exception List (GEL).

AFTA was agreed upon in 1993, with the implementation of the free trade scheme initially scheduled for 2008. The implementation date was later brought forward to 2003.

At a meeting in December 1998 in Hanoi, Vietnam, the ASEAN economic ministers later sped up the deadline to 2002, with some flexibility.

The four new ASEAN members of Vietnam, Laos, Cambodia and Myanmar are allowed to delay the opening up of their markets to 2006 to 2010.