Local businessmen want implementation of AFTA delayed

JAKARTA (JP): Indonesian businessmen called for the Association of Southeast Asian Nations (ASEAN) to delay the implementation of the association's trade liberalization agreement as most member countries are not ready to enter an open competition business environment.

The head of the National Business Development Council (DPUN), Sofyan Wanandi, said here on Tuesday that Indonesia and most of the other ASEAN members are not ready to fully liberalize their trade.

The implementation of the ASEAN Free Trade Area (AFTA) scheduled for 2003 should be delayed until 2010 to give member countries more time to prepare their economies, he said.

"The implementation of AFTA should be delayed until 2010 to give more time for ASEAN member countries to really prepare themselves and better resolve the impact of the crisis," he said at a hearing between the council, the government's advisory for business affairs, and House Commission V in charge of industry and trade.

Members of the National Economic Council, the government's advisory for macro economy, also attended the hearing.

Sofyan, who is also chairman of the Gemala Group, said that most of Indonesia's products and commodities are not ready to compete with regional products.

"Indonesia is not ready yet. AFTA will result in the influx of regional products into the country and most of our products still can't compete them," he said, citing automotive and agriculture as particular sectors that still need better preparation and protection before the implementation of the AFTA agreement.

Divided

However, the economic council is not in agreement with its partner.

DEN's chairman Emil Salim said at the hearing that Indonesia should go ahead with its commitment to AFTA's 2003 timeframe because the country has been preparing for a long time to enter the free trade agreement.

He said that like other ASEAN countries Indonesia has been preparing for AFTA since 1993 by gradually reducing import tariffs on various products.

"The import tariffs on most of our commodities are already within the AFTA bracket of zero and five percent. We're ready," he told the hearing.

DEN's secretary general Sri Muljani supported Emil's views, saying that she was upbeat about Indonesia's prospects in AFTA.

"Most of our commodities are already qualified and compatible with AFTA guidelines. I don't see any need to ask for a delay," she said on the sidelines of the hearing.

AFTA is a pact among the 10 member countries of the Association of South East Asian Nations (ASEAN), comprising Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

Under AFTA, ASEAN countries would have reduced import tariffs on various products to a maximum 20 percent by year 2000 and further to between zero and five percent by 2003. The tariff reduction will provide almost no barrier for the flow of products and services to and from each ASEAN member country.

Sofyan said Indonesia is not the only ASEAN country not ready for AFTA.

He said Malaysia had asked for an exemption from AFTA and Thailand and the Philippines were likely to follow suit.

Malaysia has made a special request that it be allowed to maintain protective tariffs on automobile imports until 2005, saying it needed to further strengthen its Proton national car program before joining AFTA.

Local car manufacturers and analysts have recently called on the government to follow Malaysia's move and ask to be allowed to maintain protection for the local car industry until at least 2005.

The ministry of industry and trade, however, shrugged off the call, saying the government had no reason to ask for a delay. It also said that the free competition would not hurt local firms, but mostly the foreign players operating in the country's car industry.

Emil said local business people should not be so worried about AFTA that they demand the government seek exemption from the pact.

"AFTA is in fact about reducing the import tariff, which we all have been doing gradually since 1993. There's no need to delay it. I believe we have good competitive advantages," he said.

He said some business people were afraid to face the free competition in AFTA mainly because they had enjoyed the government's protection for too long. (cst)