CEPA talks with EU need to start soon: Apindo
Jakarta Post | June 27 2014
CEPA talks with EU need to start soon: Apindo
Linda Yulisman
The Indonesian Employers Association (Apindo) has urged the government to kick off talks with the European Union on the planned comprehensive economic partnership agreement (CEPA), saying the lack of a trade deal has disadvantaged business players.
Apindo deputy chairman Chris Kanter said the situation has prevented local players from having greater access to the 28-member union, which currently puts tariff and non-tariff barriers in place.
“The CEPA will also enable many of our business sectors to be more competitive,” Chris said on the sidelines of Apindo’s meeting with European business community representatives on Thursday.
The trade deal would also boost confidence among European companies to pour more investment into Indonesia through a common investment treaty, he added.
According to Apindo, the CEPA negotiations would ideally start before the formation of the new administration, expected in October.
Indonesia and the EU had earlier expected to formally launch the CEPA talks at the end of December 2012, but the plan was delayed several times due to various issues.
Among the issues that both sides failed to settle are tariff reductions, services liberalization and limitation on foreign ownership.
Indonesia, for instance, expects a duty cut will be completed within nine years, while the EU proposes a seven-year deadline with flexibility for up to 10 years for sensitive products.
It also insists on protecting the financial and public utilities sectors, thereby excluding them from the services liberalization agenda. Apart from this, Indonesia wants to maintain its equity caps on foreign ownership for investment channeled into Southeast Asia’s biggest economy.
Bilateral trade between the two parties was valued at US$26.4 billion last year. The EU is the third-largest export destination for Indonesia’s commodities, with shipments including palm oil, natural rubber, mineral resources, coffee, footwear, textiles and textile products.
Meanwhile, the EU is the fourth biggest source of imports made up of vehicles, machinery, electronic products, pulp and paper, as well as milk.
However, Indonesia has yet to become a major trade partner for the bloc as it only makes up 0.21 percent of overall exports in the single market and 0.34 percent of total EU imports.
As a group, the EU is the fourth-biggest foreign investor in Indonesia in 2013, pouring funds mostly into the manufacturing, transportation, communication and logistics sectors. Nevertheless, the EU’s investment in the country only accounts for 0.5 percent of the bloc’s foreign direct investment to the world and 13.5 percent of its investment to the Southeast Asia region.
