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)