Constructive strategies vital to service trade

Constructive strategies vital to service trade

JAKARTA (JP): Indonesia must start constructing strategies to
meet the challenges and opportunities of free trade in services
and to cope with the problems faced by developing countries,
Minister of Finance Mar'ie Muhammad says.

"Domestic providers of services must improve their strength
and competitiveness because the domestic market will soon be open
to international competitors," he said after a Worldnet panel
discussion held jointly by the Indonesian Economists
Association's Jakarta chapter and the United States Information
Service.

Mar'ie said that such constructive strategies include not only
improvements in hardware facilities but also ways to acquire
information and technology from developed markets.

Mar'ie pointed out that Indonesia, like other developing
countries, is running a current account deficit in service
transactions, "despite the fact that we have achieved a
remarkable export performance, a positive current account in the
trade of goods and a positive balance of payments".

Another problem to surmount, he said, lies in the domestic
service sector, which is still in the early stages of development
and not yet sophisticated enough to win competition against
international counterparts.

Mar'ie also pointed out that unlike the trade in goods, the
trade in services recognizes only non-tariff barriers.

"This means that the implementation of an 'infant industry'
argument in the services sector may only be exercised through
non-tariff barriers," he said.

Boost

Mar'ie said the General Agreement on Tariffs and Trade (GATT),
the General Agreement on Trade in Services (GATS) and the
commitments reached through the Asia Pacific Economic Cooperation
(APEC) forum were instruments to help boost Indonesia's
competitiveness.

Indonesia is one of the signatories of the GATS -- signed in
Marrakesh in April last year -- which involves a commitment to
gradually open the service sector as part of the move towards
freer trade.

Yesterday's Worldnet dialog involved Washington-based Gary
Hufbauer, a senior fellow at the Washington-based Institute for
International Economics and Indonesian panelists Miranda S.
Goeltom from the office of the Coordinating Minister for Economy
and Finance, Rizal Ramli from the Econit Advisory Group, Ruddy
Koesnadi from Prasetyo, Utomo & Co., H.S. Kartadjoemena of Bank
Indonesia and Harry H. Diah of AIA Insurance Indonesia.

Hufbauer acknowledged that the United States would push the
service sector within GATT principles.

He mentioned the audiovisual and entertainment sectors as the
leading services which his country could offer in the free-trade
era of services.

"Indonesia has big potential in the telecommunications and
transportation sectors," he said, adding that improvements in
these services could support the tourism industry, which is
already quite advanced. (pwn)