Service industries told to anticipate liberalization drive

Adianto P. Simamora, The Jakarta Post, Jakarta

Coordinating Minister for the Economy Dorodjatun Kuntjoro-Jakti urged the country's service-related industries to boost efficiency and cooperation among themselves in order to compete with others in the region as the trade in services would be liberalized in the future.

Speaking to East Java businessmen over the weekend, he said that six members of the Association of Southeast Asian Nations (ASEAN) had agreed to eliminate restrictions on the trade in services.

He said that although the grouping had yet to agree on a schedule for the liberalization drive in the service sector, local businesses had to start preparing now.

He said that one way to boost the competitive strength of local companies when facing overseas players was by setting up a business consortium.

In 1995, six ASEAN members, Indonesia, Thailand, Malaysia, Singapore, the Philippines and Brunei Darussalam, agreed to liberalize the service industry with a plan called the ASEAN Framework Agreement on Services (AFAS).

Among the service-related industries to be affected by the plan are tourism, telecommunications, financing, construction and transportation.

The service sectors make up a significant proportion of the economies of the ASEAN members.

This is a continuation of the ASEAN Free Trade Area, which was put into effect early last year, under which each founding member country of the grouping reduces its import tariffs on the trade of goods.

The liberalization drive is expected to boost trade and investment activities in the region.

Dorodjatun said that the opening up of the service sector would give companies from ASEAN member countries greater opportunities to expand businesses here without any barriers.

Given the importance of the services sector, some nineteen members of the World Trade Organization (WTO) have also submitted formal requests to Indonesia to open up its services sectors, from communicating services to financial services.

Those filing the requests include the United States, Japan, Australia, Singapore, Taiwan, South Korea, Switzerland, Canada, China, Chile and Hong Kong.

Indonesia, meanwhile, has yet to submit any initial requests to the 145 WTO member countries as business players and the government were discussing the issue.

Indonesia has so far been a net importer in the services sector.

Data from Bank Indonesia reveals that Indonesia suffered a US$15.8 billion deficit in the export and import of services in 2002, down a bit from $17.051 billion in 2000.