Posted by: mel | January 5, 2010

Indonesia Remains Committed To Asean-China FTA

Bernama | By Ahmad Fuad Yahya | Jakarta | 5 January 2010

Indonesia has stressed that it is still committed to implementing the Asean-China Free Trade Agreement (FTA) that took effect on Jan 1, despite having notified the Asean Council of its intention to renegotiate tariff reduction on 228 items which it fears can weaken local industries.

“What the government is doing is to inform the relevant party of its intention. We will follow all the processes and procedures,” said Indonesian Trade Minister Mari Elka Pangestu here on Tuesday.

She said the government had received grievances from several industrial sectors about their fear of the FTA implementation but had explained to them of the process that needed to be passed through before the tariff reduction could be renegotiated.

Indonesia, she said, had formed a team whose function was to evaluate the FTA implementation.

“The team has been tasked with improving the local system like cutting down on bureaucracy. The team will also protect local industries from the possibility of unfair competition and monitor the distribution of substandard goods,” she told a press conference.

If the move went on smoothly, she said, it could avoid possible retrenchment of workers.

Many parties in Indonesia fear that dumping of Chinese products in the local market following the FTA implementation can cause many factories in the republic to wind up and many people will lose jobs.

Mari urged all parties in Indonesia to look at the FTA comprehensively because it could bring profits for products produced by the republic.

Indonesia had benefited from tariff reductions on several items since 2004. For example, in the export of cocoa products and crude palm oil (CPO) to China.

“Before the FTA existed, CPO exports to China were limited according to certain quotas. After the agreement, the quota was scrapped,” she said.

Besides that, FTA had also opened up the Indonesian market and this had been able to attract more investors. Several products that were previously produced in China were now shifted to Indonesia.

“We bring in the raw materials from China, have it process here and then take it to a bigger market, not only in China,” she said.

For 2010, the government has forecast a 5.1 per cent growth in export volume with the growth in export volume besides oil and gas reaching 6.0 or 7.5 per cent.

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