Jakarta Post, 25 July 2005
’Indonesia set for a fall in free trade era’
Ridwan Max Sijabat, The Jakarta Post, Jakarta
Indonesia will not be able to take advantage of increasing world trade liberalization because many stakeholders here are not even aware it is going on, an official says.
The chief of the Manpower and Transmigration Ministry’s Center for Research, Information and Development, Harry Heriawan Saleh, said the government had moved too slowly to anticipate opening markets. Businesses were also ignorant of how they could benefit from the changes to trade rules, Harry said.
"Most investors do not care about free trade, while our national education sector and most professional associations are almost completely unaware of it. The government has done only a little to prepare the necessary policies and regulations and promote the progress Indonesia has made in negotiations (with developed countries)," he told The Jakarta Post here on Thursday.
Harry feared Indonesia would be unable to take any comparative advantages from freer trade.
"This country will become a big market for foreign products and workers while we will not be able to use the same opportunities to sell our products and workers (overseas)," he said.
The Asian Free Trade Agreement (AFTA) is due to take effect next year, with all 10 ASEAN member nations opening up their labor markets in 12 main sectors, including communications, transportation, education, health, finance and tourism. The plan is in line with the World Trade Organization’s free trade deadline of 2020; the year developing countries are expected to have removed all of their trade barriers.
Compared to its neighbors, Indonesia was lagging behind in preparing for the free trade era, Harry said.
"Our neighbors, such as Singapore, Malaysia, Thailand and the Philippines, have been making their preparations for the past 10 years, meaning they are ready not only with the sectors that will be liberalized under AFTA, but also with the requirements for foreign workers. These three countries have also made bilateral deals or agreements with developed countries under GATT (the General Agreement on Tariffs and Trade).
"Indonesia has been spending the time defusing the economic crisis that has crippled its economy country since 1997. It has so far struck no bilateral agreements on free trade with other countries," he said.
Indonesian Institute of Sciences (LIPI) researcher and economist Widjaya Adi, meanwhile, expressed optimism that Indonesia could take advantage of the liberal markets, as long as the government intensified its efforts to inform stakeholders.
"The government should firstly liberalize the education sector by adopting developed countries’ competence-based education and training curricula and recruit foreign instructors to improve our education quality in line with international standards," he said.
The health sector should then follow suit to help improve Indonesia’s medical workers and paramedics, Widjaya said.
Harry and Widjaya agreed that the government and professional associations should encourage all vocational centers to adopt internationally-accepted standards in order to produce skilled and certified workers.
"Liberalized labor markets will not just require diplomas, they will need skilled and competent human resources," Widjaya said.