RI hopes FTA will boost export to China

Zakki P. Hakim, Jakarta

The government said on Thursday that Indonesian exports to China could double in three years following the gradual implementation of a free trade agreement (FTA).

Director general of international cooperation at the Ministry of Industry and Trade Pos M. Hutabarat said Presidential Decree No. 48/2004 was issued on Tuesday, ratifying the FTA between the Association of Southeast Asian Nations (ASEAN) and China.

"After the ratification, we target to double our export value to China from US$2.9 billion last year to $5.8 billion in 2007," he said.

China, with its fast growing economy and huge population, is increasingly becoming an important market for Indonesian exports.

ASEAN agreed to set up an FTA with China in 2002, and during the 2003 ASEAN Summit on Bali, the grouping further agreed to accelerate the realization of the FTA through an early harvest program. In addition, the six founding members of ASEAN agreed to set up an FTA with Japan by 2010 and with India by 2011.

Pos said that since Jan. 1, Indonesia had reduced import tariffs on some 600 of 11,000 products listed in the ASEAN-China FTA as part of the early harvest program.

He said by 2010, when the FTA with China is fully established, ASEAN expected to have cut down or removed import tariffs on up to 95 percent of listed products.

The remaining 5 percent are classified as sensitive products, including electronics and automobiles.

Pos also said ASEAN planned to accelerate the implementation of the FTA with India, hoping to implement the plan gradually starting next month.

"But the number of products to be included (in the early harvest) are still being discussed by trade officials," he said.

Meanwhile, the FTA with Japan, which is set to be initiated in January 2005, might be delayed, as ASEAN and Japan were still negotiating on product selection, he said.

"Negotiation has been difficult, since apparently Japan is trying to protect its agricultural products," he said.

ASEAN groups together Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Singapore, Thailand, the Philippines and Vietnam; China, India and Japan are ASEAN dialog partners.

Meanwhile, Pos played down fears over the possible impact of an economic slowdown in China on bilateral trade. He stressed that none of Indonesia's export products would be affected by China's tightening measures, which include investment bans on certain sectors, and added that China was likely to enjoy a soft landing.