Posted by: mel | December 30, 2009

Associations in the dark on ACFTA modifications

Jakarta Post | Mustaqim Adamrah,  Jakarta |  Business | 30 December 2009

Industry associations are in the dark over the final proposals for modifications to the ASEAN-China Free Trade Agreement (ACFTA) leading to full implementation on Jan. 1st next year.

Businesses say they have submitted their individual proposals for modifications to the Industry Ministry but have not been consulted on the final draft, which was submitted to the Office of the Coordinating Minister for the Economy last week.

Fajar Budiyono, secretary-general for the Indonesian Aromatic Olefin and Plastics Industries Association (INAplas), confirmed, saying no petrochemical firms had yet had access to the final proposal.

“The implementation of the agreement will bring harm to the industry in the future if businessmen are not involved in the final deliberations,” Fajar said.

The Industry Ministry submitted a proposal to postpone implementation of reductions on 228 tariff lines, a reduction from an earlier request to delay 309 tariff lines, to the Office of Coordinating Minister for the Economy last Wednesday.

As many as 6,682 tariff lines in 17 sectors, including 12 in manufacturing and five in agriculture, mining and maritime sectors, are scheduled for zero tariffs by Jan. 1, 2010.

Finance Minister Sri Mulyani Indrawati confirmed on Monday that all regulations on harmonization of import taxes of goods from China under ACFTA had been completed.

Hidajat Triseputro, executive director of the Iron and Steel Industry Association (IISIA) said the domestic steel industry is deeply threatened by free trade with China. A postponement of 350 tariff lines is a must he said, to give industry time to improve its competitiveness.

The Indonesian Textile Association confirmed they were not consulted on the final draft of the proposal for ACFTA modifications. But, he welcomed the government’s efforts to listen to the concerns of local industry and that  it made efforts to modify the deal, signed in 2005.

Redma Gita Wirawasta, executive director for the national textile research center Indotextiles, said there were 500 tariff lines on textiles that were worth renegotiating.

“But the fact is [government] only plans to renegotiate 53 tariff lines for postponement and even another 53 tariff lines for acceleration,” he said.

The government acknowledges the concern of domestic manufacturing industries over the implementation of free trade. Coordinating Minister for the Economy Hatta Radjasa said the government is prepared to deploy various measures to protect local industries, but “without violating any articles stipulated under the FTA.”

In response to the concerns of the Indonesian manufacturers, the Chinese Ambassador to Indonesia Zhang Qiyue said the ACFTA should be mutually beneficial to all parties. Zhang argued that the free trade deal must be viewed in “a very comprehensive way”.

She said that under the FTA scheme for instance, Indonesian textile industries can purchase machinery at prices as low as one third of the normal cost in order to upgrade their aging machinery.
The service sector will be able to develop with the flow of people between the two regions, particularly for the tourism sector, Zhang said.

She said the FTA would also facilitate investment from China to Indonesia to help support its economic growth, which is “crucial for the implementation of Indonesia’s 100-day program and five-year plan”.

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