Thu, 15 Apr 2010

From: The Jakarta Post

By Mustaqim Adamrah, The Jakarta Post, Jakarta
China has defended that it should not be the one “to blame” over Indonesian manufacturers’ concerns that they will suffer from the full implementation of a free trade agreement between ASEAN and China.

Chinese Ambassador to Indonesia Zhang Qiyue said Indonesian manufacturers should discuss how to take the advantage of the ACFTA (ASEAN-China Free Trade Area) rather than focus on the negative impact of the free trade agreement on Indonesian goods.

“Today all difficulties have been blamed on China,” he told Indonesian reporters at the Chinese Embassy recently.

“But we must implement a core analysis and ask what are the challenges.

“I hope that the businesses and the people here understand this situation and not be influenced by remarks that say the Chinese commodities are flooding the market and impact on Indonesian industries. This is not the situation.”

Indonesian manufacturers have been criticizing the Indonesian government for not protecting them enough and this has reportedly put them at stake with the full implementation of the ACFTA, which may cause cheap Chinese products to flood the Indonesian market.

The Indonesian government has effectively scrapped 6,682 tariff lines in 17 sectors, including 12 in the manufacturing sector and five others in the agriculture, mining, and maritime sectors early this year.

Industry Minister M.S. Hidayat has also expressed his disappointment of fellow Trade Minister Mari Elka Pangestu for failing to accommodate his requests on behalf of local manufacturers to renegotiate the ACFTA with China.

Zhang, however, said the negative impacts Indonesian manufacturers suffered from or could suffer from, were more a result of the global downturn, instead of the implementation of the ACFTA.

“[For example] if you look at Indonesian textiles, your main export market is not China,” Zhang said. “The main export markets for Indonesian textiles are the US and Europe.”

“So, the main reason as far as I can see, is that industries are going through difficulties because of the international financial crisis. There were fewer orders from these markets. So your industry had to retrench.” Moreover, she said both Chinese and Indonesian textile manufacturers benefited more from the
ACFTA as they imported materials from each others’ countries for production.

Indonesian textile manufacturers could also import high-technology machinery from China at one-third of the price of machines imported from Europe or the US because of the ACFTA, to help improve their productivity and competitiveness, she said.