Indonesia cautious over acceleration of AFTA

Indonesia cautious over acceleration of AFTA

JAKARTA (JP): Government officials and business executives are
cautiously approaching Brunei's call for members of the
Association of Southeast Asian Nations to speed up the completion
of trade liberalization by the year 2000.

The Sultan of Brunei, Hassanal Bolkiah, told the 28th ASEAN
Ministerial Meeting in Bandar Seri Begawan Tuesday that he hoped
the ASEAN Free Trade Area (AFTA) would be realized by the year
2000, three years ahead of schedule.

"I am optimistic about the proposal, but it depends on the
other ministries on the reduction of tariff and non-tariff
barriers," Minister of Trade Satrio B. Joedono said here
yesterday.

The Ministry of Industry, for example, will have to help
prepare the country's manufacturing industry to face
liberalization of industrial trade among ASEAN members, he said.

In addition to Indonesia, ASEAN also groups Brunei, Malaysia,
the Philippines, Singapore, Thailand and the new member Vietnam.
The association, under its agreement on AFTA, is currently
committed to gradually lowering import duties of member countries
to between zero and five percent by the year 2003.

"We have to discuss the acceleration proposal in an inter-
ministerial meeting," Joedono said shortly after inaugurating 27
officials in the ministry.

He expressed doubt whether the Director General of Customs and
Excise, for example, would be able to change all the documents on
the new tariff codes for some 9,000 trade items.

Meanwhile, Minister of Industry Tunky Ariwibowo told the press
after meeting with President Soeharto at the latter's residence
here yesterday that Brunei's proposal has to be studied.

"I have read newspaper reports saying that the suggestion on
the acceleration of trade liberalization came from Brunei, which
has not developed any industry. Certainly, we will study the idea
very carefully," Ariwibowo said.

"We must be very cautious because Indonesia is the biggest
market in the ASEAN region. Whether the idea will benefit
Indonesian industries needs to be discussed by the ministers," he
added.

Deputy chairman of the Indonesian Chamber of Commerce and
Industry (Kadin) Iman Taufik also commented that he is doubtful
of Indonesia's ability to compete should the AFTA be in effect by
the year 2000.

"I am indeed doubtful of Indonesia's capability to compete
against Thailand, Malaysia and Singapore due to our high-cost
economy," Antara quoted Taufik as saying.

Indonesian businesses have often expressed their concern with
red tape and long licensing procedures in the country, both of
which have increased production costs.

The businesses don't seem to be ready to face fiercer
competition, said Taufik, citing the example of the Salim Group,
which exports only six percent of its companies' total products.

Poor transportation conditions and infrastructure facilities
remain obstacles to improving the competitiveness of Indonesia's
products on the international market, said Taufik.

He suggested that the government speed up the readiness for
competition by introducing more deregulatory measures, reducing
import tariffs and simplifying procedures.

A reaction to the proposal was also given yesterday by the
chief commissioner of PT Astra International, A.R. Ramly, after
meeting with President Soeharto.

"We will bring Brunei's proposal to the next ASEAN summit
meeting in November. But in my opinion, it is better for us to
maintain the AFTA deadline of 2003," said Ramly, who met the
President in his capacity as a member of the APEC Pacific
Business Forum. (kod)