Minister defends RI's participation in info-tech deal

JAKARTA (JP): Minister of Industry and Trade Tunky Ariwibowo defended yesterday Indonesia's participation in a pact to liberalize trade on information technology products as the right move to protect its interests.

Tunky argued that Indonesia's acceptance of the Information Technology Agreement (ITA) was part of its efforts to develop the country's information technology (IT) industry through an efficiency drive, not protection.

"By cutting tariffs on IT products to zero percent, we hope that we will see a more competitive environment in the industry," Tunky said.

Tunky said Indonesia would benefit from the agreement because most of the products under its coverage were not yet produced in Indonesia.

Indonesia, along with 27 other countries -- mostly developed countries, signed the ITA on the sideline of the World Trade Organization (WTO) ministerial meeting in Singapore last week.

A number of critics have said Indonesia's acceptance of the ITA came as a surprise, considering it is believed the country lags behind in the IT industry.

Even countries like Malaysia and Thailand, which have more advanced IT industries, did not join the pact.

Thai and Malaysian officials said their countries did not participate in the ITA because it would not liberalize consumer products, in which they have a competitive advantage.

Tunky believed Indonesia's and Singapore's participation in the ITA would not weaken the spirit of the Association of Southeast Asian Nations (ASEAN), which usually takes a common stance on various issues in international fora.

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

Tunky rejected an assumption that by adopting the agreement, Indonesia would have no chance to build a strong IT industry. "On the other hand, we would be able to develop the industry in a competitive environment."

He also denied the accusation that the government had no clear policy direction to develop the IT industry.

"We do have a concept. If we have not announced it to the public, it does not mean we do not have one," Tunky said.

Hadi Soesastro of the Center for Strategic and International Studies said Indonesia could benefit from the ITA as long as it attracts more foreign investors to produce IT products here. Otherwise, Indonesia would become a dumping ground for IT products from developed countries.

The minister said the government would continue to attract foreign IT producers to relocate their factories to Indonesia to benefit from the country's expanding domestic market.

"However, we would not promise them any tariff protection. What we can offer them is our policy and large domestic market," he said.

He said that Toshiba Corp. of Japan and LG Electronics of South Korea had initially asked the government for 30 percent tariff protection for their TV tubes. The government, he said, rejected the proposals. Nevertheless, they continued with their investment plans here.

"It means we can attract IT investors and develop the IT industry through efficiency, not tariff protection," Tunky argued.

The minister rejected criticism that Indonesia's acceptance of the ITA would weaken its bargaining position in future negotiations on various sectors of the WTO's built-in agenda -- basic telecommunications, financial services and maritime transport.

Tunky, however, acknowledged that the ITA served as a precedence in the WTO to achieve sectoral liberalization by a number of countries only. (rid)