GATT principles will affect Indonesian economy: Minister
JAKARTA (JP): A minister warned yesterday that the new principles of the General Agreement on Tariffs and Trade (GATT) will affect Indonesia's economy, which is not ready to face fierce competition through trade liberalization.
"Some of our industries, such as textile manufacturing, are footloose while others with comparative advantages, like the forest-based industry, are facing non-tariff barriers in other countries," State Minister of National Development Planning Ginandjar Kartasasmita said in a seminar here.
He explained that many Indonesian industries are footloose because they are too concentrated on the downstream level and are not well supported by upstream industrial facilities.
As a result, these industries will have difficulty competing with products from industrial countries that already have developed upstream industries, most of which are protected strongly by their governments, he said.
He said Indonesia cannot protect its infant upstream industries heavily because the present era of liberalization calls for a reduction of trade barriers.
Ginandjar, who is also chairman of the National Development Planning Board (Bappenas), said that the country's forest-based industry has competitive advantages on the international market but that importing countries tend to protect their domestic industries through such non-tariff barriers as environmental stipulations.
He reiterated that now was the time for Indonesian industries to foment downstream activities and that it was critical not to fall behind neighboring countries that have also actively promoted upstream industries in anticipation of the inevitable global competition in the new economic liberalization era.
APEC
Hadi Soesastro, executive director of the Centre for Strategic and International Studies (CSIS), told the seminar of the impact of international economic developments on Indonesia's own economy, saying that the country's businessmen are not prepared well enough to face the trade liberalization that will likely be adopted by the Asia Pacific Economic Cooperation (APEC).
APEC's 17 members are scheduled to hold their second leadership meeting in Indonesia in November to work out plans to liberalize trade among themselves by the year 2020.
"I have never seen an initiative, for example, to gather policy makers, economists and businessmen at a same table for discussions on APEC and all of its consequences," Hadi said.
Bimantara Group's executive director, Peter F. Gontha, one of the panelists at yesterday's seminar, concurred that Indonesian businessmen are not ready to compete with their regional counterparts in the Asia-Pacific market, due to an absence of close cooperation between conglomerates and smaller businesses.
Regardless, Ginandjar said that Indonesia cannot possibly retreat from world competition.
Instead, Indonesia should take steps to face the challenges by introducing various measures, including the continuation of deregulation, the improvement of the human resources, the strengthening of economic institutions, the improvement of research and development activities and the introduction of selective government interventions. (fhp)