Govt, businesses told to boost efficiency ahead of world's largest FTA
Govt, businesses told to boost efficiency ahead of world's largest FTA
Adianto P.Simamora, The Jakarta Post, Jakarta
Experts warned both the government and the country's business
sector to boost efficiency in anticipation of the planned world's
most populated regional free trade area (FTA) or else risk losing
competition, particularly from China.
Cutting red tape should be a high priority, economists said.
"It will be difficult for Indonesian businesses to compete
with Chinese firms if they remain unprepared," said University of
Gadjah Mada economist Sri Adiningsih.
Chinese Premier Zhu Rongji and Southeast Asian leaders,
including President Megawati Soekarnoputri, agreed at this week's
ASEAN summit in Brunei Darussalam to establish a regional free
trade area comprising rapidly growing China and resource-rich
Southeast Asia within a 10-year period.
It will be the world's largest FTA in terms of population,
with about 1.8 billion people and the third largest in terms of
gross domestic product (GDP) after the North American and
European FTAs.
Sri said that without immediate action to address inefficiency
in the country's economy and business sector, the planned FTA
would only open up the domestic economy to cheaper products made
in China, which would flood the domestic market and threaten the
survival of local industries.
She added that many businesses were not even ready to face the
looming Asean Free Trade Area (AFTA), which will start in 2002.
Economist Bustanul Arifin of the private think tank, Institute
for Development of Economics and Finance (Indef), concurred.
"Local businesses should work flat out to improve their
competitiveness," he said, adding that the upcoming AFTA could be
used as an exercise ground to win competition in the greater
arena.
Under AFTA, the six founding members of ASEAN - Indonesia,
Singapore, Malaysia, Thailand, Brunei Darussalam, the Philippines
- would lower import duties on several products to between zero
and five percent.
The new ASEAN member countries of Vietnam, Laos, Cambodia and
Myanmar will be allowed to delay the opening up of their markets
until between 2006 and 2010.
Bustanul also said that local businesses should strengthen
their market intelligence so as to determine China's market
demand.
"I think...China will use this opportunity to explore more new
markets in ASEAN," he said, adding that Chinese businessmen had
already established strong business links in the region.
Mohamad Ikhsan, economist at the University of Indonesia
voiced optimism that the free trade area would mutually benefit
both ASEAN and China.
"This is a good opportunity for Indonesia because China is now
ready to open up its profitable market," Ikhsan said.
He said China, with its big population but insufficient
resources, would be a new potential export market for Indonesia
because there was a huge demand for natural resources in China.
According to Chinese officials, the trade between Indonesia
and China totaled US$7.5 billion in the year 2000.
China imports mainly crude oil, palm oil and timber from
Indonesia while exporting mainly electronic appliances and
motorcycles to Indonesia.