Minister asks for delay in ASEAN-China FTA start-up
THE JAKARTA POST | 08/19/2009
Minister asks for delay in ASEAN-China FTA start-up
Mustaqim Adamrah
Citing potential damage to domestic industry, Industry Minister Fahmi Idris may ask President Susilo Bambang Yudhoyono to consider delaying the implementation of the free trade agreement between ASEAN and China, which takes effect in 2010.
Fahmi said on Tuesday that his ministry’s stance remained firm that the FTA - which will open up various sectors in both mar-kets by gradual reduction of import duty tariffs - would bring more harm than benefits to Indonesia, given China’s superiority over Indonesia with regard to competitiveness.
While admitting that there is little chance the request would be granted as it would also affect collective sentiment among members of ASEAN, Fahmi said: "There should be a delay. This is our country. Why should we be afraid of *penalties imposed if Indonesia asks for a delay*? If the manufacturers have said they are not ready, then I say we’re not."
"Everybody knows that China is strong*er* *than Indonesia* in the upstream and downstream textile industry for instance," he said.
The FTA, which was signed in 2004 and will take into effect on Jan. 1, 2010, will gradually reduce import duties on, among others, textiles and garments, footwear and leather products, ceramics, food and beverages, iron and steel products, petrochemicals and electronics shipped out from China.
At present, the influx of imported Chinese products, including textiles, electronics, iron and steel, is already hurting domestic players, manufacturers have claimed, let alone when the FTA becomes effective.
Many business groupings have voiced their concern over the FTA.
One of them is the Indonesian Textile Association (API), whose deputy chairman Ade Sudrajat, had previously said textile imports from China "may double" from some US$900 million to $1.8 billion once the FTA became effective as smuggling would no longer be necessary and thus, illegal Chinese textiles would become "legal".
This $900 million represents 15 percent of the $7 billion total domestic textile market, he said.
According to Ade, textile exports stood at around $4.45 billion in the first half of this year and are expected to reach $11 billion this year, a slight increase from the $10.8 billion recorded last year.
Trade Minister Mari Elka Pangestu has said that signatory countries had agreed unanimously to scrap a number of tariff lines gradually, or at once, based on an agreed schedule, therefore, a delay might cause Indonesia to be penalized.
She cited an example, where Malaysia asked to postpone its tariff reductions scheduled in an FTA involving ASEAN members for its automotive sector.
"As a consequence, Malaysia had to pay fines to other ASEAN countries," Mari said.
She said no preventive measures were allowed under the FTA to protect local manufacturers. "We can later impose safeguards but only if there is proof that local manufac-turers suffer injuries resulting from an influx of imported *Chinese* products."
