Manufacturing sector faces no problem with free trade

JAKARTA (JP): Minister of Industry Tunky Ariwibowo stated yesterday that Indonesia's manufacturing industry will face no problems with the APEC trade liberalization.

"We still have much time and our manufacturing industry is experienced enough," the minister said of the decision of the Asia and Pacific Economic Cooperation (APEC) forum in Bogor yesterday afternoon to liberalize trade among members.

Speaking to newsmen after addressing the APEC Business Forum, the minister said the government has given strong emphasis to the development of intermediary industries in a bid to further support the manufacturing sector.

"We hope the manufacturing sector will be efficient enough when the free trade arrangement is fully implemented," he said.

APEC leaders decided at a one-day forum yesterday to liberalize trade in the Asian and Pacific area by no later than 2010 for advanced member economies and by 2020 for developing members.

Tunky acknowledged that the government's bureaucracy and outdated regulations still hamper a cost efficiency program but he promised such shortcomings would be further minimized.

The minister said the different levels of members' economies will strongly influence the 18-member organization to cooperate in resources, technology and labor factors.

Tunky said that APEC's developed and newly industrialized members could benefit from the cheap labor and resources of the developing members, which will, in turn, receive capital and more advanced technology from their developed partners.

Trade barrier

In his speech at the business forum, held concurrently with the APEC meeting, Tunky said many developed countries impose a wide range of non-tariff barriers, such as stringent technical standards and the adoption of quota systems to prevent the entry of goods from developing nations onto their markets.

He said that such non-tariff barriers should be removed. Such practices would hurt both sides because the drop in developing countries' exports would also reduce their capability to import from industrialized countries.

"Export per se is not the objective of the developing nations," he said, adding that most developing countries use their export earnings to buy products and services from developed nations in order to sustain their economic growth and to improve their living standards.

Developing countries' exports will, therefore, neither displace the domestic production of developed nations nor cause further unemployment as many economists fear, he argued.

"A recent study by Professor Robert Lawrence of Harvard shows that the bulk of developed nations' trade is with countries whose populace earn similar wages," Tunky said to back up his argument.

The minister said that the reason for the unemployment rate in developed nations increasing could lie elsewhere, "perhaps in the technological changes or skill shifts as these nations make the transition from an industrial era to an information era." (rid/hen)