High efficiency vital for entering free market
JAKARTA (JP): Indonesia should reduce its high cost economy so as to enable its products to enter the free market system within the APEC member economies, say local economists.
Christianto Wibisono, the director of the PDBI business data center, said that Indonesia, as part of the world's community, has to follow the global trade liberalization trend.
In his opinion, the free trade arrangement under the General Agreement on Tariffs and Trade (GATT) still would have been implemented according to existing schedules even if APEC had failed to agree on the free trade commitment.
"We, therefore, have no choice but to follow the trade liberalization trend," he said in his comment to the free trade agreement reached Tuesday at the leadership meeting of the 18- member Asia Pacific Economic Cooperation (APEC) forum in Bogor, West Java.
At the one day forum, APEC leaders decided to liberalize trade in the Asia and Pacific rim by no later than 2010 for advanced member economies and by 2020 for developing members.
"Like it or not, we have to join the free trade pact," he said.
Christianto said that the signing of the APEC free trade and investment declaration in Bogor was not only a credit to Indonesia but also a needed push for the country to appear on the world's business map.
He warned, however, that the trade liberalization drive should be followed by improving Indonesia's political openness.
"The trade liberalization should go hand in hand with the liberalization in the political system," he said. "Otherwise market distortion will continue damaging the country's business activities."
Noted economist Kwik Kian Gie said that free market mechanisms should be introduced immediately by first abolishing protection and monopolies in a number of the country's economic sectors.
"Red tape and a corrupt mentality on the part of government officials should also be immediately minimized to create fairer business practices," he said.
Kwik, also the head of the research and development agency for the Indonesian Democratic Party (PDI), said that the country's industrial sector should be further diversified.
EU
Meanwhile, the European Union yesterday welcomed the decision by the APEC members to create a free trade zone no later than the year 2020.
Sir Leon Brittan, the commission member with responsibilities for external economic relations, said in Brussels yesterday that he was encouraged by the confirmation given during the APEC meeting in Bogor, Indonesia, of Asia's commitment to continued trade liberalization.
"So long as APEC reduces barriers in the region without raising barriers to trade with the rest of the world, this is good for Europe as well as for APEC," he was quoted by AFP as saying in a statement.
Brittan said that the APEC states had reaffirmed their determination to achieve full implementation of the results of the Uruguay Round of the GATT negotiations.
He said they had also undertaken maximum efforts in each of their economies to ensure the early ratification of the agreement that will establish the World Trade Organization and allow it to be operational from the start of next year.
A systematic and informal dialogue between the EU and APEC would benefit both sides, he noted.
The German government also praised APEC's pledge yesterday.
"The German government welcomes the fact that APEC nations have agreed to develop the economic integration of the dynamic Asia-Pacific region and to intensify the cooperation between APEC members with the aim of achieving lasting and balanced growth," the foreign ministry said in a statement, as quoted by Reuters.
Germany would continue to support stronger cooperation between the European Union and the Asia-Pacific region, the statement said. Germany holds the rotating EU presidency until the end of the year and will be succeeded by France. (hen/fhp)