Indonesia unprepared for liberalization of services
Adianto P. Simamora, The Jakarta Post, Jakarta
Nineteen members of the World Trade Organization (WTO) have submitted formal requests to Indonesia to open its services sectors, with professional services and communication services topping the list, a senior official said on Tuesday.
Indonesia, on the other hand, has yet to submit any initial requests to the 145 WTO member countries despite the fact that the deadline has passed, said Hari Sugiarto, a member of the Indonesian delegation to the WTO's negotiations on services.
"As of today, we have received some 19 proposals for opening up the services sectors, from communications services to financial services," Hari said.
Those filing the requests include the United States, Japan, Australia, Singapore, Taiwan, South Korea, Switzerland, Canada, China, Chile and Hong Kong.
Japan, for example, filed a proposal with the government to liberalize some 12 service sectors.
"The biggest demand is to open up business or professional services and communication services," he said.
Indonesia, meanwhile, has yet to submit any initial requests to the 145 WTO member countries.
"We still don't know what we want," Hari said.
He said that the government and several businesses were discussing the country's position in the services sectors in the WTO.
"We want to first improve the quality of the country's services sectors to enable them to compete against global players," he said.
Negotiations in services and agriculture were launched in 2000, following the failure of the WTO meeting in Seattle, United States, in December 1999.
In 2001, the WTO ministerial meeting in Doha, Qatar, urged WTO members to submit their initial requests before June 2002 and initial offers in March 2003.
The negotiations for services sectors are expected to be completed by December 2004.
Members of the Indonesian delegation for the services sectors is scheduled to leave for Geneva soon to take part in the WTO meeting on services from May 10 through May 20.
Developing countries, which are mostly still protecting their services sectors from foreign competition, fear the future WTO agreement on their liberalization would lead to the domination of foreign firms in their services industry.
Indonesia has so far been a net importer in the services sector.
Data from Bank Indonesia shows that Indonesia suffered a US$15.8 billion deficit in the export and import of services in 2002, down a bit from $17.051 billion in 2000.
Hotbonar Sinaga, the chairman of the Indonesian Insurance Council, said that the country's insurance sectors were not yet ready to face a liberalized market under the WTO agreement.
"We need more time. We are not ready yet due to a lack of funding and human resources skills," he said.
Meanwhile, a global market economist at Standard Chartered Bank, Fauzi Ichsan, said that the liberalization of services in the country would not necessarily mean foreign investors would come to the country.
He said that even if the country's banking industry was liberalized, foreign banks would still be hesitant about entering the country.
"The WTO would not make foreign banks aggressively enter Indonesia as the country risk here is still high," he said.