Kadin supports early AFTA implementation

Kadin supports early AFTA implementation

JAKARTA (JP): Chairman of the Indonesian Chamber of Commerce
and Industry (KADIN) Aburizal Bakrie said on Monday that the
organization would give its full support to an early
implementation of the ASEAN Free Trade Area (AFTA).

Aburizal said that he believed that Indonesian companies would
be ready for an introduction of AFTA by as early as 2001.

"I think the next three years will be enough for us to prepare
ourselves to enter AFTA. By then our economy should have
recovered," Aburizal told reporters after opening the 2nd meeting
of the Indonesian British Business Council and Kadin's British
committee.

"I believe that our economy will start to recover by the end
of this year, at which point the rupiah's exchange rate will be
standing at Rp 6,000 to the U.S dollar. Early implementation of
AFTA will give us a lot of benefits," he added.

Aburizal added that the sharp depreciation in the rupiah's
value had given Indonesian goods a competitive edge against
fellow manufacturers in the Association of South East Asian
Nations (ASEAN).

"At the current exchange rate of Rp 8,000 per U.S dollar, our
currency has depreciated by over 200 percent from the pre-crisis
level of Rp 2,500, while our neighboring countries' currencies
have only depreciated by around 80 percent," he said in his
comments on the agreement struck last week in Manila by ASEAN
economics ministers to introduce AFTA in 2001, rather than 2003
as initially planned.

"Even at the exchange rate of Rp 6,000 per dollar, our goods
would still be remarkably cheap compared to other countries," he
added.

Aburizal said that early implementation of AFTA would not be
hampered by the high interest rates currently imposed by the
country's banking sector.

"I predict that deposit interest rates will be lowered to 30
percent by the end of next year, in line with the expected
recovery in the economy," he said.

Last week, ASEAN ministers announced plans to accelerate
agreed cuts on import tariffs on products traded within the
region, including unprocessed agricultural products, to stimulate
ASEAN trade.

AFTA plans call for a lowering of tariffs on most goods traded
within the region to a maximum of five percent by 2003.

ASEAN groups Brunei, Cambodia, Indonesia, Laos, Malaysia, the
Philippines, Singapore, Thailand and Vietnam.

Meanwhile, several Indonesian businessmen have said the
country is not yet ready for early implementation of the AFTA
scheme.

Mohamad Hidayat, the head of KADIN's real estate division, was
quoted by the Bisnis Indonesia daily as saying the country could
take part in an accelerated AFTA scheme only if the economy first
recovers.

"Indonesia is not yet ready to face the accelerated
introduction of AFTA, unless the government can guarantee that by
2001, the health of the economy will have been restored," Hidayat
said.

Thomas Darmawan, the head of Kadin's food industry division,
argued that Indonesia should first seek the harmonization of
tariffs, especially import duties, which he said were still high
in some ASEAN countries.

Countries such as the Philippines, Thailand and Malaysia still
impose tariffs as high as 60 percent on imports, Darmawan said,
adding that Indonesia's equivalent tariffs on agricultural
produce were around five percent.

Aburizal also said that political stability was one of the
main ingredients required to ignite the country's economic
recovery. (gis)