FTA turns Indonesia’s trade surplus with China into deficit
BERNAMA | July 30, 2009
FTA Turns Indonesia’s Trade Surplus With China Into Deficit
JAKARTA, July 30 (Bernama) — The implementation of its Free Trade Agreement (FTA) with China has turned Indonesia’s trade surplus with the former into a deficit of US$3.61 billion, a chamber of commerce and industry official said.
"Since the implementation of the FTA, the growth of Indonesia’s imports from China is not balanced with its exports to that country," deputy chairman for trade, logistics and distribution of the Indonesian Chamber of Commerce and Industry (Kadin) Beny Sutrisno was quoted by Antara news agency as saying here on Wednesday.
Speaking on the sidelines of a discussion on the anticipation of ASEAN-China FTA in 2010 at the hall of the Indonesian Textile Industry Association (API) here on Wednesday, Beny said Indonesia’s trade surplus with China had dropped significantly since the signing of the FTA.
The drop was marked by a decline in Indonesia’s trade surplus with China to a deficit of US$3.61 billion in 2008, he said.
Indonesian trade deficit with China in the non oil and gas sector is also large. It dropped from a surplus of US$79 million in 2004 to a deficit of US$7.16 billion in 2008.
Besides, he said, in 2008 Indonesia’s trade balance also tumbled from US$32.75 billion in 2007 to only US$23.31 billion.
The decline was mostly experienced by the non oil and gas sector which reached 42.5 percent.
"The decline in the country’s trade balance surely influences Indonesia’s economic growth which is not balanced with the inflation rate and eventually reduce the people’s prosperity," Beny said.
He said that the jump in Indonesia’s imports from China was fueled by among others the cut in import duties since the signing of the ASEAN-China FTA in 2004.
In 2005, China’s agricultural products enjoyed a zero percent import duties when they entered the country. The same was true to the manufacturing products, where the tariff of their import duties continued to be cut until 5 percent in 2009.
Based on the agreement, Beny said, the import duties of most of manufacturing goods would have been cut to zero percent in 2010, except sensitive agricultural products.
"If the zero percent import duties on manufacturing goods are imposed in 2010, it can be ascertained that Indonesia’s manufacturing products would be harmed and its trade deficit would continue to increase," he said.
