Indonesia aims to establish FTAs with key trading partners
Indonesia aims to establish FTAs with key trading partners
Adianto P Simamora, The Jakarta Post, Jakarta
The government will intensify bilateral talks with Japan, the
United States, China, India and Australia this year in an attempt
to seek the possibility of entering into free trade agreements
with these countries, according to a senior official at the
Ministry of Industry and Trade.
Tri Marjoko, director for bilateral cooperation at the
ministry, said on Monday that such a move was also aimed at
preventing buyers from these five countries from shifting their
orders from Indonesia.
"We will focus our efforts more on FTA talks with these five
countries to prevent them from shifting orders from Indonesia,"
he said.
Under the planned free trade mechanism, the country's market
would have to be fully opened up to products from the trading
partner countries.
Countries involved in FTAs must also slash import tariffs on
their products, making their products cheaper.
According to the World Trade Organization (WTO) secretariat,
currently there are some 250 FTAs in existence worldwide.
"We must follow the current global trend on free trade so that
we'll not be left far behind, especially from our neighboring
countries," he said.
Indonesia has so far just entered into an FTA with members of
the Association of South East Asian Nations (ASEAN) under its
ASEAN Free Trade Area (AFTA) scheme.
ASEAN groups Brunei, Cambodia, Indonesia, Laos, Malaysia,
Myanmar, Singapore, Thailand, the Philippines and Vietnam.
A couple of the ASEAN members, however, have already entered
into FTAs with countries outside the region.
Singapore, for example, has inked FTAs with the United States,
Japan, Australia, New Zealand and Chile. Singapore is also now in
formal talks with Canada, China and Mexico for similar
agreements.
Thailand is also in talks with India, Japan, Australia, New
Zealand, South Africa, Brazil, Croatia, the Czech Republic and
Russia.
Tri said that his office would conduct a number of meetings
with the five countries this year.
"We will meet with top officials from Japan in August to
further discuss the planned FTA between Indonesia and Japan," he
said.
The possibility of an FTA deal was reached during the meeting
between President Megawati Soekarnoputri and Japanese Prime
Minister Junichiro Koizumi in Japan last month.
Japan currently has a free trade agreement with Singapore and
is in discussions on similar agreements with the Philippines and
Thailand.
Japan is Indonesia's second largest trading partner after the
United States with Indonesia's non-oil and gas exports to Japan
reaching US$6.3 billion and Indonesia's non-oil and gas imports
from that country totaling $4.2 billion last year.
Japan is also the largest foreign investor in Indonesia and
the country's largest creditor.
"We hope we will reach a final agreement on the FTA with Japan
next year," he said.
With the United States, said Tri, the governments of the two
countries had conducted surveys to determine the products to be
included in the planned FTA.
The United States is Indonesia's biggest export market,
accounting for around 16 percent of its total export sales.