Chamber of commerce calls for ACFTA renegotiation
Jakarta Post, Indonesia
Chamber of commerce calls for ACFTA renegotiation
23 April 2011
Debate over the ASEAN-China Free Trade Agreement (ACFTA) goes on as Indonesia’s Chamber of Commerce (Kadin) calls for renegotiation to give time for Indonesia to develop its downstream industry.
In a discussion on the free trade issue here on Saturday, Kadin’s deputy chairman on trade, distribution and logistic division Natsir Mansyur said Indonesia needed to revise the agreement to stop the trade deficit.
He said Kadin had warned that Indonesia would suffer US$5.6 billion in deficit if the agreement implemented. Despite the warning, the government went ahead with ACFTA, which started Jan. 1 this year.
“We are not saying that we cancel the agreement. But, we have to renegotiate it,” Natsir said.
Beside the renegotiation, Natsir said that Indonesia had to develop downstream industry and spend the expenditure budget wisely to counter Chinese goods.
He suggested that Rp 500 trillion (US$579 billion) of government expenditure and Rp 3,000 trillion of private expenditure to be spent on domestic products.
However, an economy expert from University of Indonesia, Faisal Basri, said that improvement on products’ competitiveness was more important than renegotiation.
“There is no country which set a surplus in trading with all countries. But, the problem with trade between Indonesia and China, is it because ACFTA or because we don’t have a good industrial map?” he said.
He believes the core problem is Indonesia’s failure to integrate domestic economy with regional and global economy. Moreover, he said, Chinese products flooded Indonesia via trading with other countries anyway.
Faisal said ACFTA must be seen as an opportunity for Indonesia to sell its product as Chinese market was four times bigger than Indonesia.
He said people made a fuss about Chinese consumption products like shoes and toys, which comprised only 7.4 percent of China’s total export to Indonesia.
Faisal said 70 percent of the import from China was raw materials, which was a bigger economic problem than the flood of consumption products.
