Govt told to broach FTA with Japan

Govt told to broach FTA with Japan

Adianto P. Simamora, The Jakarta Post, Jakarta

Economic experts say that the Indonesian government must take
advantage of Japanese Prime Minister Junichiro Koizumi's visit
here to pursue the establishment of a bilateral free trade
agreement (FTA) with the world's second largest economy.

"This is the right moment for the government to discuss a
bilateral free trade agreement with Japan," Sri Adiningsih, a
professor at Gadjah Mada University, told The Jakarta Post on
Saturday.

Her comments came after two of the six founding members of the
Association of Southeast Asian Nations (ASEAN) -- Singapore and
Thailand -- agreed to each build up a bilateral FTA with Japan.

In October, Japan and Singapore completed negotiations to
launch their bilateral free trade accord.

On Friday, Koizumi, on his five-nation tour in the region,
also said that he agreed in principle with his Thai counterpart,
Thaksin Shinawatra, to set up an FTA between their countries
within the year.

Koizumi arrive in Jakarta on Saturday. Japan is Indonesia's
second export destination after the United States.

"We will suffer many losses if the government fails to take
this opportunity to discuss the FTA," Sri said. "The FTA scheme
is not a bad thing, because each ASEAN country must also
prioritize its own national interests."

She added that Thailand would use the bilateral agreement to
increase agricultural exports to Japan with low import tariffs.

Japanese farmers are currently still protected by their
government from cheap agricultural imports.

"It will also be easier to invite more investment from Japan
(in Indonesia) if there is a bilateral FTA," Sri said.

Meanwhile, Soy Pardede, a senior official at the Indonesian
Chamber of Commerce and Industry (Kadin), voiced fear that the
establishment of a FTA with Japan would threaten the ASEAN Free
Trade Area, popularly known as AFTA.

"In terms of ASEAN context, this is not the right moment to
set up FTA with Japan," Soy said.

But he admitted that the government might be forced to discuss
the possibility of setting up FTA with Japan so as not to be left
behind Singapore and Thailand.

Leaders from the six founding ASEAN nations agreed to set up
AFTA in 1993, with the implementation of the free trade scheme
initially scheduled for 2008 but later moved up to 2002.

Under the AFTA scheme, almost all products traded in the six
founding ASEAN countries members now have import tariffs of
between zero percent and 5 percent

Analysts have said that Koizumi's trips to five ASEAN nations
would be used to boost Japan's profile in the region to counter
China's intensified dialog with ASEAN members.