Service industries told to anticipate liberalization drive

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.