'FTA deal with Japan may not benefit RI'
Fitri Wulandari, The Jakarta Post, Jakarta
Several analysts urged the government on Friday to be cautious in its plan to strike a free trade accord (FTA) with Japan, as it might boomerang on the domestic market and end up benefiting Japan more than Indonesia.
Ine Minara S. Ruky and M. Chatib Basri of the University of Indonesia questioned the benefits of the FTA for Indonesia, considering that many Indonesian products had been less and less competitive in the past year.
"The FTA could work and benefit both countries if their products met the main requirement, which is being highly competitive," Ine Minara told The Jakarta Post on Friday.
"Unfortunately, our competitiveness in the international market is doubtful," she remarked.
Both Chatib and Ine urged the government to study its position in trade relations with Japan before striking the deal, so that Indonesia does not end up only serving as a market for Japan.
"The government must find out whether the FTA would make Japan our market or only make us a more open market for Japan," Ine said.
The analysts were responding to a proposal by Minister of Industry and Trade Rini M.S. Soewandi during a meeting with Japan's vice trade minister Sanae Takaichi at the Asia-Pacific Economic Cooperation (APEC) forum in Los Cabos, Mexico.
Rini said a bilateral FTA with Japan would help Indonesia achieve a swifter recovery from the five-year economic crisis.
Takaichi reportedly told Rini that Japan was positive about kicking off negotiations on the FTA. He advised the Indonesian government to submit the proposal through diplomatic channels.
Japan has so far concluded an FTA with Singapore, but it has held talks with Thailand and the Philippines.
Japan has been Indonesia's top trading partner for years in terms of both value and volume. Export value to Japan was US$13 billion in 2001, slightly down from $14.41 billion in 2000.
As for imports, the value of trade between the two countries was $4.68 billion in 2001, down from $5.3 billion in 2000.
Exports from Indonesia consist mainly of raw materials, including crude oil, coffee, rubber, tobacco, shrimp, sawn wood, copper and garments
Indonesia imports fertilizers, cement, motor vehicles, iron and steel tubes, and machinery, among other items.
Ine also has doubts about whether Indonesia's manufacturing sector, which has been in a slump throughout the economic crisis, would benefit from the agreement.
"The FTA may not be the best option for Indonesia. There are better choices," she remarked, while not providing details about the alternatives.
Chatib predicted that the FTA would meet strong resistance from numerous local industries in both countries, which have repeatedly asked their governments to raise tariffs to protect their domestic markets.
"Both governments have strong protections for their domestic markets. Are they willing to face the strong opposition from their respective domestic markets to open their markets?" Chatib asked.