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)