RI, EU begin negotiations on comprehensive economic partnership

The Jakarta Post, Jakarta | Wed, 06/15/2011

Indonesia and the European Union (EU) held the first of a series of negotiations toward a Comprehensive Economic Partnership Agreement (CEPA) during an event in Jakarta on Wednesday.

The event was organized to facilitate the presentation of recommendations from the Indonesia-EU Vision Group, which was established in December 2009 by Indonesian President Susilo Bambang Yudhoyono and European Commission President Jose Manuel Barroso, to "invigorate the Indonesia-EU partnership", especially in the trade and investment sectors.

During the Wednesday event, these recommendations were officially handed over to Indonesian Trade Minister Mari Elka Pangestu.

Also during the event, Vision Group co-chairman Djisman Simanjuntak said that while Indonesia and the EU were in "good and healthy relations, the status quo is unsatisfactory".

"We need a new initiative to invigorate the relations, in the pursuit of growth, job creation and poverty alleviation. So it's not only about trade but also for job creation ... for both Indonesia and the EU," Djisman said.

Mari said that over the next few months Indonesia and the EU would be engaged in intensive consultations regarding the CEPA, comprising the governments and the private sectors of both parties.

Djisman added that he hoped the negotiations would be completed within two years.

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President: EU can be ASEAN strong partner to develop together

Antara News, Thu, May 5 2011

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Jakarta (ANTARA News) - President Susilo Bambang Yudhoyono in his opening speech at the First ASEAN-EU Business Summit here Thursday said the European Union (EU) can be a strong partner with ASEAN to develop together.

"Europe has a much longer experience in economic integration and community building. ASEAN has and will continue to learn from the European experience," President Yudhoyono, as the ASEAN Chair, said in the Business Summit attended by around 400 businessmen from European and Southeast Asian counties.

According to Yudhoyono, ASEAN and EU clearly are important to each other, as EU is the second largest trading partner for ASEAN, and the largest investor, while ASEAN is EU`s fifth largest trading partner.

He also said that the ASEAN-EU Summit should also be used as a chance to play a role in changing the paradigm on which economic policies are made, to turn the tide of events in favour of both regions.

"This Business Summit is timely for ASEAN, as we make a final sprint to achieve a true ASEAN Community by 2015. But, in realizing this objective, we are not without challenges," he said.

The world recovery is gaining strength, but output gaps and unemployment remain high in advanced economies, while new challenges are building in emerging economies, according to the Indonesian head of state.

Much has also been gained in achieving an ASEAN economic community, he said.

"When leaders agreed on the vision of an ASEAN Community in 2003, the size of the ASEAN economies was $700 billion, and now it becomes $2.9 trillion. If we include ASEAN and the six partners which it already has trade agreements - China, Japan, Korea, India, Australia and New Zealand - then the size is amount to $15 trillion, or the same economic size as EU and US," the president stated.

Editor: Bambang

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Jakarta Globe, April 30, 2011

Chinese Prime Minister Wen Jiabao and Indonesian President Susilo Bambang
Yudhoyono at a press conference shortly after their meeting on Friday. (EPA Photo)

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Chinese Prime Minister Wen Jiabao saaid Saturday Beijing wants to boost cooperation in trade and security with the 10-member Association of Southeast Asian Nations (Asean).

In a policy speech on the last day of a three-day visit to Indonesia, the current chair of Asean and its biggest member, Wen extolled the virtues of an Asean-China free trade agreement (FTA) that came into effect in January.

“China is committed to deepening practical cooperation with Asean,” Wen said.

“Last year, China became Asean’s biggest trading partner. We launched the largest FTA among developing countries and we have set the target of $500 billion in two-way trade by 2015,” he said.

China will increase capacity building and human resources training to speed up development in the poorest Asean members, he said.

“China stands ready to work with Asean to maintain regional security and stability,” he said.

Indonesian officials say Jakarta wants to renegotiate its part of the landmark free trade pact to protect vulnerable sectors from competition with Chinese manufacturers.

On Friday, Wen held talks with Indonesian President Susilo Bambang Yudhoyono and announced billions of dollars in loans for badly needed infrastructure projects in the archipelago.

AFP

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President opens "Inacraft 2010" in Bali

Antara News, Wednesday, April 21, 2010 16:40 WIB

Tampak Siring (ANTARA News) - President Susilo Bambang Yudhoyono officially opened the 12th Jakarta International Handicraft Trade Fair (Inacraft 2010) at Tampak Siring Palace here on Wednesday.

On the occasion the head of state said the handicraft industry in Indonesia played a strategic role in the country`s economy because it had a big market opportunity and absorbed a great number of manpower.

"The important and strategic theme for the handicraft trade fair this year is from a smart village to a global market, because it is a strategic industry that can absorb a great number of manpower," President Yudhoyono said.

According to the head of state, many parties had a profound interest in handicraft products because of their profitable sale prices and inspiration.

"I am optimistic that various handicraft products in the country can bridge cultural relations among nations around the world," the president said.

Therefore, the head of state reminded the craftsmen to continue to develop their idea, creativity, and improving the quality in the tight global market competition.

Global market, according to the president, would highly respect safe and environmentally-friendly products.

"Handicraft industry can really support the people`s economic power, and therefore we need to improve the design, quality, and packing system, and trademark," the president said.

On the occasion the head of state also asked the craftsmen to have self-confidence following the implementation of Asean Free Trade Area and China-Asean Free Trade Agreement.

"Have self-confidence in the face of Asean Free Trade Area and China-Asean Free Trade Agreement, because the government will make an all-out effort to make a policy to strengthen the national economy," the president said.

President Yudhoyono added that with the free trade area, Indonesia would be able to have wider opportunity in attracting as many investors as possible.

"We are tested to be able to come out of transitional period in the trade era because it is our role to build a profitable but fair world economic architecture," he added.

RI exporters yet to adapt to ACFTA

The Jakarta Post, Sat, 04/03/2010 9:53 AM

Too close for comfort?: Indonesian Trade Minister Mari Elka Pangestu (left) talks with her Chinese counterpart, Chen Deming (right), while the chairman of the China Committee at the Indonesian Chamber of Commerce and Industry, Kiki Barki, listens at a meeting in Jakarta, on Friday. The meeting was aimed at strengthening trade relations between both countries and to discuss plans to renegotiate the ASEAN-China Free Trade Agreement. Antara/Prasetyo Utomo

The free trade agreement between ASEAN and China (ACFTA) has been cited as not being been “effective” for Indonesia as imports from China surged in the first two months of 2010 over the same period last year.

The Central Statistics Agency (BPS) announced Thursday that non-oil-and-gas imports from China surged by 55 percent to US$2.79 billion in the first two months of this year, from $1.8 billion in the corresponding period last year.

According to BPS data, non-oil-and-gas goods from China topped Indonesia’s imports, contributing 18.58 percent to the total non-oil-and-gas imports.

However, non-oil-and-gas imports from China decreased slightly by 1.8 percent from $1.41 billion in January to $1.38 billion in February, while Indonesia’s non-oil-and-gas exports to China were worth $986.2 million in February, down 2.4 percent from $1.01 billion in January, the data shows.

BPS chief Rusman Heriawan said declines in both Indonesia’s non-oil-and-gas exports to and imports from China were a result of both countries’ traders using an older trading mechanism that was not under the ACFTA.

“The ACFTA was initially expected to boost exports to China and imports [from China]. Apparently, it did not [happen that way],” Rusman said at a conference at his office.

“In February, which was expected [to see the ACFTA come into

effect], the ACFTA was in fact not [effective yet]. This means businesses have not responded to the ACFTA yet.”

In the initial phase of implementation of the ACFTA that came into effect early this year, the government scrapped 6,682 tariff lines in 17 sectors, including 12 in the manufacturing sector and five others in the agriculture, mining and maritime sectors.

An influx of manufactured products from China is expected accordingly. Indonesian exports to China (mostly are raw materials) will consequently enjoy zero duties, unlike China, which exports mostly manufactured products.

Indonesia exports mostly liquefied natural gas, as well as mining and agriculture commodities (including coal, bauxite, crude palm oil and cacao) to China.

Separately, Trade Minister Mari Elka Pangestu said it was more important to have Indonesia’s non-oil-and-gas exports to China continuing to grow than to have a surplus trade balance, despite the presence of the ACFTA.

She also said there was “good” news in bilateral negotiations between Indonesia and China in regard to the ACFTA in response to local manufacturers calls for renegotiation.

The results would be announced Saturday in Yogyakarta, when Indonesian and Chinese delegations are due to hold a joint commission meeting.

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Indonesia Must Welcome Foreign Investors for Economy to Fulfill Potential: Experts

Jakarta Globe, Antara & Irvan Tisnabudi, March 28, 2010

The government must ease restrictions on foreign investors and overcome fears about opening up domestic markets to access the massive amounts of funding needed to build crucial infrastructure and stimulate growth, analysts, foreign envoys and government officials have said.

Indonesia is far ahead of the curve in terms of economic performance compared to rivals both regional and global. But to a large extent, the country’s brisk growth has been supported by household spending and high commodity prices that drive exports. Investment, especially from overseas, has lagged behind neighbors because of policies that make it frustrating to do business here.

Gita Wirjawan, chairman of the Investment Coordinating Board (BKPM), has said $140 billion to $150 billion in investment is needed over the next five years to retool the nation’s infrastructure and achieve the president’s target of 7 percent annual growth. The government, however, will only be able to provide as much as $60 billion of the total.

Ross O’Brien, corporate network director of the Economist Intelligence Unit, said at a seminar last week that he doubted local investors could cover the financing gap, making the need for overseas capital even more pressing.

Complicating this, however, was the government, which he said lacked the transparency and desire to transform the investment climate for the better, especially for foreigners.

“For something that should be as straightforward as investing, the Indonesian government, in my opinion, still lacks the consistency needed in order to make the process of investing easier,” O’Brien said.

He added that the government was dragging its feet in opening up the economy, pointing to the negative investment list’s (DNI) heavy restrictions on foreign participation in many industries.

“The negative investment list could bring in much needed investment to specific sectors but I don’t see the government trying its best to [make it happen]. Not all sectors will eventually be opened to foreigners and I think that’s a shame,” he said.

Despite the government relaxing investment road blocks in the health care, agriculture and creative industries, it still restrict foreigners from tapping 23 sectors such as telecommunication towers, broadcasting and alcoholic beverages, Gita told Reuters this month.

Responding to O’Brien’s criticism, Gita said the government had made a maximum effort to open the economy to foreigners, including cutting red tape to improve the investment climate. He said that the government deserved credit for lifting restrictions on the health care industry, in which foreign ownership of hospitals had been limited to a few cities such as Surabaya and Medan.

As part of reforms to attract investors, Gita said the BKPM was simplifying business licensing procedures. “At BKPM we now issue licenses faster. It previously took 30 to 40 days but now it can be done in seven days and five hours,” Gita said.

He acknowledged, however, that land acquisition and building permits still posed serious obstacles.

Zhang Qiyue, the Chinese ambassador, said Indonesia could learn a lesson from her country, where foreign direct investment has been the catalyst for unparalleled growth over the past 30 years.

“The government needs to realize that more potential will be uncovered if more foreign investment enters the country,” she said at the Economist seminar.

But with opportunity comes risk. The Asean-China Free Trade Agreement has stoked fears among textile and steel producers that they will not be able to compete with China’s industrial might. When asked about the impact of the trade deal, Zhang said that socialization and education were the key to overcoming public concerns.

“In China, we are trying to educate our people, not only those who live in the capital, but also in the provinces, on ACFTA and its implications,” she said.

Indonesian Trade Minister Mari Elka Pangestu agreed with Zhang that opening the economy to the world would require education.

“For a nation to thrive globally, its people and businesses have to be prepared,” said Mari.

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Indonesia's Broadcast Freedom Must Be Safe From China’s Meddling

Jakarta Globe, John Riady, March 28, 2010

Earlier this week, government authorities closed down Radio Era Baru, a radio station in Batam. The official reason: shortage of radio frequencies. Another view is that the closure is related to China’s opposition of the radio station’s links to and funding by the Falun Gong movement. In a letter addressed to the Ministry of Foreign Affairs, China warned of damage to Indonesia-China relations should the radio station not be shut down.

Whether or not a shortage of frequencies was merely a pretext remains to be investigated, but there is ample reason to be skeptical. The station was denied a license in 2007. If the shortage was real, why was it allowed to broadcast for the last three years? When its license was denied, why wasn’t a reason provided and why did claims of a shortage appear after public uproar? Many stations operate without a license. Why single one station out? Why not reorganize the frequencies during those three years, as was done in Jakarta a few years back? The radio station’s legal appeal has reached the Supreme Court and a decision is expected soon. Why deploy police to clamp down on broadcast freedom on the eve of a decision that might render such an extreme intervention unnecessary?

If the allegation against China is true, China’s intervention is offensive and the decision from Indonesian authorities is shameful. This is a critical issue and needs to be addressed using legal and quasi-legal remedies. Legal remedies can address the issue domestically, but to sanction China, more creative quasi-legal remedies are needed. Allow me to explain.

Legal Remedies

The argument is that the government’s closing of the radio station for reasons related to its links with Falun Gong violates Indonesia’s constitutional right to expression (Article 28) and is thus unconstitutional. A potential problem is that since Article 28 has not been litigated much, it is unclear what the boundaries of this freedom of expression are.

To solve this, the courts should look to international law for guidance, in particular the Universal Declaration of Human Rights and the International Covenant of Civil and Political Rights, which Indonesia has ratified. Given the near universal acceptance of the declaration, at least some of its provisions have reached the status of “customary international law.” This means that all countries, even those not members of the UN, can now be bound by those provisions.

The ICCPR’s guarantee of the right to expression is broad enough to be used in this case. Article 19 states that “Everyone shall have the right to freedom of expression; this right shall include freedom to seek, receive and impart information and ideas of all kinds … through any other media of his choice.”

While the ICCPR does allow the limiting of expression when necessary for the protection of “national security,” it was held that it does not allow nations to prohibit speech just because it advocates the ideology of a political enemy. China should take note.

The treaty’s operative principles imply that countries have positive and negative obligations — this would include having in place licensing procedures that are consistent with the principle of free expression and that prohibit the use of police to crack down on violations.

These two legal remedies — our Constitution and the ICCPR—should provide generous grounds for the protection of Era Baru’s rights. However, these measures do not facilitate possible Indonesian sanctions against China. Domestic courts and ICCPR remedies have no teeth against other countries. For this, we turn to quasi-legal measures.

Quasi-Legal

The idea here is to use trade sanctions to compel trading partners to adhere to principles that they have agreed to in nontrade agreements, in this case the Universal Declaration of Human Rights. This would require framing freedom of press and censorship not as an issue of free press but rather a violation of WTO rules on free trade of “market access” and “national treatment.”

In a case where China censored its press by prohibiting foreign media companies from operating in China, the WTO panel concluded that these measures were inconsistent with China’s obligation under the national treatment and market access clause of the General Agreement on Trade and Tariffs.

The idea of framing violations of free press in terms of violations of trade law has gained more and more acceptance. The European Union passed a proposal that would require member countries to classify any Internet censorship as a barrier to trade, and would require that the issue be raised in any trade negotiations.

Linking trade with press law is similar to the way in which trade is linked to environmental and labor standards — we do this all the time.

In light of the Asean-China Free Trade Agreement, this is a crucial point. Even though this trade agreement is separate from the WTO, there are significant parallels. China has much to gain from the establishment of a free trade area. If it is to reap the benefits of trade, it must not be allowed to pick and chose. Free trade comes in a package. With access to an enlarged market to which China is able to export its goods, it must also eliminate barriers to trade, which includes censorship and violation of free press.

Many in Indonesia complain that its domestic industries are not ready to compete with China. Proponents of trade argue that only when they are forced to compete will they then be ready. Now it is China’s turn to complain that they are not ready for free speech. To this we should say: sink or swim.

We need a thorough investigation to determine the real reasons for the radio station’s closing. If it turns out to be true that the closure was related to pressure from China, a strong stance needs to be taken. A free press at home can be protected using legal remedies. As for getting our point across with China, we need to resort to trade law.

John Riady is lecturer at the Pelita Harapan Universit y Law Faculty and editor at large at GlobeAsia. He can be reached at john@globeasia.com.

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China urged to back joint ventures in RI

Mustaqim Adamrah, The Jakarta Post, Jakarta | Fri, 03/26/2010 10:58 AM

Indonesia is urging China to invest here instead of mainly being a trader, and to back a “win-win solution” in the implementation of the free trade agreement between ASEAN and China (ACFTA).

Industry Minister Mohamad Suleman Hidayat said Thursday that during the visit of Chinese Prime Minister Wen Jianbao to Jakarta on April 23, there would be “some important programs” to discuss, including future Chinese investment in Indonesia.

His visit is part of the celebration of the 60th year of Sino-Indonesia relations.

“I’ve asked the Chinese [industry] minister to [help create more] concrete cooperation — [by having] his manufacturers come here and join with our manufacturers in joint investments,” Hidayat told reporters at the ministry.

“Don’t just export all the time. This is also part of a win-win solution in the ACFTA.”

With the full implementation of the ACFTA early this year, the government effectively has scrapped 6,682 tariff lines in 17 sectors, including 12 in the manufacturing sector and five others in the agriculture, mining, maritime sectors.

An influx of manufactured products from China is expected following these changes.

Similarly Indonesia will enjoy zero duties in China on its exports, most of which are raw materials, unlike Chinese exports which are mostly manufactured products.

Indonesia exports to China liquefied natural gas and mining commodities including coal and bauxite as well as agricultural commodities such as crude palm oil and cacao.

Indonesia also exports some manufactured goods like fabrics and jamu (herbal medicine) to China.

On the other hand, Indonesia imports a large number of manufactured goods from China, such

as steel products, footwear, garments, food and beverages, ceramics, plastic-made products, toys, chemicals, furniture, electronics, machines, electronic devices, electrical components, IT products, tools and herbal medicines.

During the visit of Prime Minister Wen, Indonesia and China are also expected to discuss other issues, including defense.

Foreign Minister Marty Natalegawa said earlier a strategic partnership with Beijing would be all-encompassing and comprehensive, including defense cooperation.

The strategic partnership has translated into a number of cooperation deals, including joint military production which started in 2008 and an extradition agreement signed in 2009.

Indonesia has also conducted joint military training with China, whose military budget is the world’s second-largest after that of the United States.

RI sends letter to China to renegotiate ACFTA

The Jakarta Post, Jakarta | Tue, 02/09/2010 10:04 PM

The Indonesian government has sent a letter to China requesting a renegotiation of the ASEAN-China Free Trade Agreement [ACFTA].

“Director General for International Trade Gusmardi [Bustami] sent a letter of request to renegotiate with China. The request is still in process and will take some time,” Industry Ministry M.S. Hidayat told Antara on Tuesday.

Hidayat further said that Gusmardi had been communicating with the Chinese government over the renegotiation, which he believed to be in progress.

President Susilo Bambang Yudhoyono previously said that he would pursue talks with China to avoid negative impacts from the free trade deal between ASEAN and China.

The ACFTA, based on an agreement signed in 2004 and fully effective as of Jan. 1 this year, has introduced zero tariffs on 6,682 tariff posts in 17 sectors, including 12 in manufacturing and five in agriculture, mining and maritime sectors. (nkn)

India wants to build broad-based ties with RI: FM

Veeramalla Anjaiah, The Jakarta Post, New Delhi | Mon, 02/08/2010 11:01 AM

India and Indonesia are the biggest democracies in Asia and have enjoyed historical economic and cultural links for more than a thousand years. Both countries now have new foreign ministers. India’s new Minister of External Affairs S.M. Krishna, a Fulbright scholar and a veteran politician, gave a written interview to The Jakarta Post’s Veeramalla Anjaiah recently in New Delhi where he talked about the growing strategic ties between India and Indonesia. The following are excerpts of the interview.

Question: What, according to you, could be the most inspiring factor that has kept both countries’ relationship not only stable but has made it stronger today?

Answer: India has enjoyed civil and trade relations with countries of Southeast Asia, in general, and Indonesia, in particular, for nearly 2 millennia. These relations have been further consolidated under India’s ‘Look East Policy’, which signifies our strong resolve to engage with our partners in the ASEAN region.

Both India and Indonesia have been maritime neighbors and strategic partners since 2005. It was in November 2005, during the visit of President Susilo Bambang Yudhoyono, that our countries decided to embark on a New Strategic Partnership. In June 2007, when my predecessor Pranab Mukherjee visited Indonesia, two sides agreed on an action plan to implement the new strategic partnership. This action plan calls for a regular exchange of ministerial visits for exchange of views and expansion of cooperation and activation of existing institutional arrangements between the two countries.

In a nutshell, our relations with Indonesia are rooted in history; characterized by strong civil linkages; and the determination by leadership on both sides to consolidate our relations in the years to come.

How does democratic Indonesia, the world’s biggest Muslim populous nation, figure in India’s foreign policy?

Being the two largest democracies in Asia, our two countries can play a constructive role in bringing peace, stability and development in our region. As maritime neighbors (the eastern most island in the Andaman and Nicobar chain is separated by only 90 nautical miles from the tip of northern Sumatra), both India and Indonesia together control the entry point from the Indian Ocean to the Bay of Bengal in the north and the Malacca Straits to the east. We jointly conduct coordinated patrols along the international maritime boundary line at the mouth of the Malacca Straits. We also have a memorandum of understanding (MoU) in place for cooperation in the area of counterterrorism.

Indonesia has many natural resources and vast economic potential, making it an attractive long-term partner for India. A number of Indian companies have invested in Indonesia since the 1970s.

Indonesia is a key country in the context of our dialogue partnership with ASEAN and our participation in the East Asia Summit. Thus, our relations with Indonesia assume significance in the bilateral as well as regional contexts.

Bilateral trade value reached US$10 billion in 2008, yet it is still not commensurate with both countries’ real economic potential. What measures are to be taken to boost economic ties to rectify this?

The recent period has seen rapidly increasing trade and investment relations with Indonesia, which is currently our third largest trading partner in ASEAN. Our bilateral trade turnover crossed $10 billion in 2008, surpassing the target set for 2010 two years ahead of schedule. This is a very positive development.

At the same time, there is a need to give further impetus to our bilateral economic relations, keeping in view the vast untapped potential. We are taking several measures such as organization of industrial exhibitions, trade and investment promotion activities, discussions on business opportunities and buyer-selling to further promote economic and trade relations between the two countries.

Last year India signed the much-awaited FTA with ASEAN countries. Do you see any difficulties in implementing this FTA with Indonesia?

The ASEAN-India FTA came into force with effect from Jan. 1, 2010. As I understand, India and three ASEAN partners, namely Singapore, Malaysia and Thailand, have notified the ASEAN Secretariat of completion of their ratification formalities. Indonesia is still in the process of ratifying the FTA. This is a procedural matter and will be completed as per established domestic requirements in Indonesia. We do not see any difficulties in implementing the FTA with ASEAN and are confident that it will enhance bilateral trade and investment relations in years to come.

Surprisingly, we have new foreign ministers in both countries at the same time. Indonesia has been seeking closer ties with both China and India at bilateral, regional and global levels. How do you see China’s growing influence in ASEAN?

I am very pleased that Indonesia has a very young and dynamic foreign minister, Dr. Marty Natalegawa. I felicitated him when he took over in October 2009 and have invited him to visit India this year for the 4th meeting of the Joint Ministerial Commission. I look forward to his visit that will give us an early opportunity to review the whole gamut of our bilateral relations and the ways to move forward.

Like India, China also has enjoyed a long history of cultural and trade relations with the countries of Southeast Asia. Like India, China is an active dialogue partner of ASEAN. We have common interests in our engagement with the region and believe that as members of the East Asia Summit, we could collectively contribute to the regional development and economic integration in East Asia.

Last but not least, how do you visualize that the Indonesia-India bilateral relations will shape up in the next five years?

Both sides are committed to a speedy implementation of the action plan for the Implementation of the New Strategic Partnership. The action plan provides a good roadmap for further consolidation of our partnership across all areas of cooperation over the next 5-10 years. During the coming years, we will work toward developing a broad-based relationship expanding cooperation in the political, security, economical, science and technology, educational, cultural and people-to-people contacts.

ACFTA seen as serious threat to small Industries

Antara News, Saturday, February 6, 2010 18:13 WIB

Jakarta (ANTARA News) - The ASEAN-China Free Trade Area (AC-FTA) poses a serious threat to numerous people`s industries in Indonesia, a students movement spokesman said here on Saturday.

"It is a serious problem that needs special management. We should not focus our attention only on acts to save a small bank like Bank Century from a difficult situation, while ignoring the security of the people`s industries at home," Indonesian National Students Movement (GMNI) Center Presidium chairman Cokro Wibowo said.

He made the statement to respond to the pros and cons on the implementation of AC-FTA since January 1, 2010 while the domestic people`s industries were still unprepared to face the free trade area.

"The ASEAN China-Free Trade Area including Indonesia is feared to cause a systematic de-industrialization in the country," Cokro Wibowo said.

He said he was afraid that besides causing people`s industries in the villages to go bankrupt, the AC-FTA would in the long run also cause massive layoffs and kill business opportunities for the people at large.

"We know that before the implementation of AC-FTA, inexpensive products from China already inundated markets down to village level in Indonesia . Is this not a serious threat?", he asked.

Therefore, Cokro Wibowo on behalf of GMNI asked the government, especially the Trade Ministry and related House of Representatives` Commissions to take positive measures to enforce national economic sovereignty.

Meanwhile, Fayakhun Andriadi, a member of the Golkar faction in the House Commission-I said on a separate occasion that mismanagement in the free trade area cooperation could have a negative impact on economic growth and economic justice for the people in Indonesia.

"The AC-FTA for me is like a time bomb, because it can become a serious problem in the future," said the young politician from the Golkar party.

Staff: ACFTA mere legalizing smuggled products from China

Antara News, Wednesday, February 3, 2010 03:12 WIB

Jakarta (ANTARA News) - A finance minister`s expert staff, Chatib Basri, said the implementation of the Asean-China Free Trade Agreement (ACFTA) should not cause fear as what would happen is the smuggled products from China is legalized.

"We have been worried about something that has actually happened. Chinese products have already been here through smuggling. Now it is mere legalizing them," he said after a discussion on the first 100 days of President Susilo Bambang Yudhoyono`s administration and the direction of the Indonesian economy here on Tuesday.

He said smuggling of Chinese products occurred because the price in China differed from that in Indonesia due to the imposition of import duties.

With the reduction of duties through the ACFTA the prices of the products in Indonesia would be the same as in China.

"If the duties are reduced people will go to legal imports. The impact will be seen in the import data later," he said.

Chatib said the Chinese products had already entered into the country in the last ten years.

He said the reduction of duties would not either cause a jump in imports.

"When the duties drop our average duties are actually already low namely seven percent so if they are cut further the impact will not be as fearful as we think," he said.

A senior researcher of the Habibie Center, Umar Juoro, meanwhile said the impact of the implementation of the ACFTA could not be stopped although it could be delayed.

"No matter how long it will be delayed it cannot be stopped. What has been a problem is that China would not relocate its industries into Indonesia because they are needed to provide work for its citizens," he said.

In view of that he said the government had to be able to push buinessmen to make use of the market already opened through the ACFTA.

"The challenge would be how to create a selective strategy so that people would get more benefit," he said.

Global crisis weakens Indonesia’s 2009 exports

Aditya Suharmoko, The Jakarta Post, Jakarta | Tue, 02/02/2010 9:33 AM

Indonesia’s exports were down nearly 15 percent last year as the global economic crisis cast a shadow over the country’s major export earners, dampening demand.

The Central Statistics Agency (BPS) reported Monday that the country’s exports dropped 14.98

percent last year to US$116.49 billion in 2009 from $137.02 billion in the previous year.

During 2009, non-oil and gas exports totaled only $97.47 billion, declining 9.66 percent from the previous year, the BPS reported.

However, the decline in exports was within the government’s projected contraction in exports of between 10 and 15 percent.

The government expects exports to rebound this year by 5 percent, said Trade Minister Mari Elka Pangestu in early January.

Meanwhile, imports in 2009 also dropped, and fell even more than exports as factories stopped purchasing raw materials amid sluggish demand in the world market.

Despite the decline in foreign trade, the government estimated that Indonesia’s economy would grow by 4.3 percent in 2009. The BPS will announce the official growth figure on Feb. 10.

On a monthly basis though, total exports rose 49.82 percent to $13.33 billion in December, compared to the same month in the previous year. Non-oil and gas exports reached $10.83 billion, or a 44.55 percent increase.

Last year, Indonesia mostly exported industrial products, which accounted for 63.03 percent of all products shipped abroad. The rest were mining products (16.89 percent of total exports), oil and gas products (16.33 percent) and agricultural products (3.75 percent).

The composition of exports was almost unchanged from 2008.

Japan was Indonesia’s main destination for exports in 2009. Japan bought $11.98 billion of Indonesian products, or 12.29 percent of total exports, according to the BPS.

Meanwhile, the US was ranked in the second position, purchasing $10.46 billion of Indonesian

goods (10.73 percent of total exports), and China was in third position, with $8.91 billion of goods (9.14 percent).

Imports last year reached $98.86 billion, a 25.03 percent decrease from 2008, the BPS said. Non-oil-and-gas imports stood at $77.87 billion, falling 21.06 percent from the previous year.

Imported goods were mostly raw materials, 71.92 percent of total imports. Capital goods were 21.11 percent of total imports and consumer goods only 6.97 percent.

Indonesia mostly imported machinery (18.79 percent of total imports), electrical equipment (14.52 percent) and steel products (5.6 percent).

Even before the free trade agreement between ASEAN countries and China (ACFTA), Chinese imports were predominant last year, reaching $13.5 billion (17.33 percent of total imports), the BPS reported.

Indonesia also imported many products from Japan, with $9.82 billion (12.61 percent) of total imports, and Singapore, with $9.24 billion (11.86 percent).

Citi analyst Johanna Chua said December saw the trade surplus widen further to $3 billion from $1.9 billion in November. “We expect the trade surplus to gradually narrow as domestic demand continues to pick up,” she said.

Businesses and analysts predicted Chinese products could flood Indonesia after the ACFTA was introduced on Jan. 1.

The government has said it would help industries to compete against cheaper Chinese products by providing incentives, if needed.

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Bali businesses to capitalize on ACFTA

Ni Komang Erviani, The Jakarta Post, Denpasar | Mon, 02/01/2010 10:57 AM

The newly implemented ASEAN-China Free Trade Agreement (ACFTA) could be a gold mine for business players in Bali should they make the most of the increasing influx of foreign products, an entrepreneurial organization said Sunday.

The Bali branch of the Indonesian Young Entrepreneurs Association (HIPMI) said that entrepreneurs

in Bali should see the agreement as an opportunity to expand their businesses.

“The free trade agreement will indeed pose some threats to businesses, but it also provides abundant opportunities,” said association head I Nyoman Seniweca.

He said the implementation of the ACFTA would mean lower prices for imported products from China, due to the elimination of import duties.

Businesses players in Bali, he said, could capitalize on the situation by creating new products from the Chinese manufactured goods.

“Business owners can import cheap materials or finished goods from China. And with the remarkable creativity of the Balinese people, I’m sure that they can create new products with Balinese

characteristics and then export them, including to China.”

Seniweca said the government should support local businesses in Bali by securing their copyrights.

“The government should help local businesses to obtain copyrights to avoid their products being imitated and mass-produced in China.”

This would be the best way to cope with the impacts of the ACFTA, he said, as it would be difficult for Indonesia to compete with China considering the wide disparities between the two countries in terms of resources and financial indicators.

“China has cheap energy, cheap workers and low annual interest rates. It’s impossible for us to compete with China in the same products,” he said.

He said that China’s interest rate of between 4 and 5 percent per year was very low compared to Indonesia’s 15 to 17 percent interest rate per year.

Gede Darmaja, head of the Bali Industry and Trade Agency, shared a similar view about the differences between production costs of Chinese and Indonesian manufactured goods, while stressing that local businesses in Bali could take advantage of the free trade agreement.

“China doesn’t produce wood crafts such as those produced by our entrepreneurs, and many of our

textile entrepreneurs import materials from China, so this condition is actually profitable for them,” Darmaja said.

He said that China has been an export target for Balinese products. The agency data shows that exports of Balinese products to China last year reached US$3.329 million, which accounted for 2 percent of the total export from Bali valued at $501 million.

The export of Balinese products to China has grown 0.39 percent per year, dominated by fishery products valued at $1.925 million (57.85 percent), and handicrafts with $774,284 (23.25 percent).

Balinese businesses also export fruit valued at $603,257 (18.2 percent), textile and textile products amounting $19,980 (0.6 percent) and vanilla beans $5,952 (0.18 percent).

Darmaja said the agency would continue to support local businesses to tap into the Chinese market to deal with the ACFTA.