Some local products not ready to compete under AFTA, Kadin says
Some local products not ready to compete under AFTA, Kadin says
Adianto P. Simamora, The Jakarta Post, Jakarta
The Indonesian Chamber of Commerce and Industry (Kadin) said
that some 27 percent of local products were not yet ready to
compete in the ASEAN Free Trade Area (AFTA), which would start
early next year.
Kadin's senior official Soy Pardede said on Tuesday that the
unreadiness was due to various internal problems, which have been
inhibiting the development of competitive and efficient local
industries.
"Around 27 percent of local commodities are not yet ready to
compete in AFTA," Soy said, adding that the information was
gathered based on a survey involving 80 business associations.
According to Kadin's data, the products that are not yet able
to compete included coffee, steel, pipes, sugar, rice, industrial
machinery, electric appliances, aluminum foil, cables, oil and
gas products, paint and varnish products.
Under AFTA, the import tariff in the six founding member
countries of the Association of Southeast Asian Nations (ASEAN),
which includes Indonesia, Malaysia, Singapore, Thailand, Brunei
and the Philippines, will be cut down to between 0 percent and 5
percent.
However, the four new ASEAN members of Vietnam, Laos, Cambodia
and Myanmar will be allowed to delay opening up their markets
until between 2006 and 2010.
Soy said that one of the main problems for the poor
competitiveness of local products was their high dependence on
imported raw materials.
He added that the government's aggressive tax policy, by
imposing a very high level of value added tax and luxury tax on
local-made products, was not helping local industries.
Soy said that other internal problems included the weak legal
environment, the poor implementation of the regional autonomy
policy and the uncertain business climate.
Kadin has been actively organizing meetings and conferences
with local industries and business associations to examine their
preparations in anticipating AFTA.
The result of these programs will be submitted as input for
the government.
"We have submitted the facts to the chief economic minister
and the trade and industry minister," Soy said
"It now depends on what the government will decide about the
findings," he added.