Jakarta, 10.06.2013 – Trade Minister Gita Wirjawan urged local business players to be fully prepared to face fierce competition resulting from the influx of foreign goods following the implementation of the ASEAN single market in 2015.
Speaking during a leadership gathering of the Indonesian Employers’ Association (Apindo) in Jakarta, Gita said Indonesian manufacturers should improve their quality if they wanted to take advantage of the ASEAN single market, which is envisioned to ensure free flows of goods and services between ASEAN countries, consisting of Brunei, Cambodia, Indonesia, Singapore, Malaysia, Myanmar, Laos, Thailand, Vietnam and the Philippines.
“It will be better for us as producers to improve competitiveness with the aim of going beyond our domestic market,” Gita, a former investment banker and businessman, told hundreds of executives at the meeting. If Indonesian producers only thought about serving the domestic market, they would certainly lag behind their competitors in other ASEAN countries.
Gita added that once local executives were able to improve their competitive edge, they would also be able to tap into market potential in other ASEAN member countries.
Indonesia has so far exported much more than it has imported to other ASEAN countries in terms of value. In the first two months of the year, it booked a surplus of US$537.7 million from overall non-oil and gas trade with all countries in the bloc, but suffered a $861.8 million deficit with Thailand due to sizeable imports of vehicles, automotive parts and agricultural produce.
At present, Indonesia applies tariffs of up to 5 percent under the ASEAN Free Trade Area (AFTA) with the bloc’s five other members — Brunei, Malaysia, the Philippines, Thailand and Singapore — for more than 99 percent of all traded goods, excluding rice, sugar, alcoholic drinks and goods related to national security.
As envisioned by the ASEAN Economic Community (AEC) Blueprint, the community will be supported by four pillars: a single market and production base, a highly competitive economic region, a region with equitable development and a region fully integrated in the global economy.
In response to Gita’s call for better preparation for the AEC — more popularly known as the ASEAN single market — recently reelected Apindo chairman Sofjan Wanandi said that the private sector could not work alone and needed government support in many ways, particularly to address major bottlenecks hampering the business climate, including poor infrastructure, legal uncertainty and high production costs.
“Our basic concern is whether we are able to do our homework to anticipate the AEC in these two years. There’s no other way except for the government and the private sector to work hand in hand,” he said, adding that the government should also ask for a delay to open its service sector if local businesses were not ready by the deadline.
Industry Minister MS Hidayat said his ministry had already designed a road map to boost efforts by related stakeholders in anticipation of the single market, but declined to give more details.
“I’m sure if the road map is implemented, we can enhance our competitive edge,” Hidayat told reporters.
Indonesia, the world’s fourth most populous nation with a population of around 240 million, is struggling to cope with key bottlenecks eroding its business climate. Source: Jakarta Post