ACFTA
The Impact to Indonesia
I.
INTRODUCTION
Starting January 1, 2010 Indonesia had to open domestic markets widely to ASEAN
countries and China. The opening of this market is the manifestation of the free trade
agreement between the six ASEAN countries (Indonesia, Thailand, Malaysia, Singapore,
Philippines and Brunei Darussalam) with China, called the ASEAN-China Free Trade
Agreement (ACFTA). The products imported from ASEAN and China will more easily
enter Indonesia and cheaper because of the tariff reduction and elimination of tariffs, and
tariffs will be zero percent within three years (Dewitari, et al 2009). In contrast, Indonesia
also has the same opportunity to enter the market within the city, the ASEAN countries and
China.
Some accept the application of ACFTA as an opportunity, but on the other hand there is also
rejected because it is seen as a threat. In ACFTA, opportunity or threat (Jiwayana, 2010)
indicated that for the recipient, ACFTA considered positive because it can provide many
benefits for Indonesia. First, Indonesia will have additional revenue from the VAT new
products into Indonesia. Additional revenue was in line with the increasing number of
objects in the form of tax types and number of products into Indonesia. A variety of Chinese
products coming into Indonesia is considered a big potential to bring in tax revenue for the
government. Second, competition posed by ACFTA competition is expected to trigger a
competitive price that will ultimately benefit the consumer (resident / merchant of
Indonesia). When the recipient views as an opportunity ACFTA, who refused to look
ACFTA circles as a threat for various reasons. ACFTA, among them, potentially
bankrupting many companies in the country. Bankruptcies of domestic firms is the impact of
the feared flood of Chinese products and it has proven to have a cheaper price. Slowly when
the continuity of the industry into bankruptcy, the local workers would be threatened with
termination of employment (FLE).
Pressure from industry for the implementation of business circles indicate magnitude
ACFTA delayed negative effect on the industry in Indonesia. Meanwhile, the government
continued its agreement with the permanent review and evaluate a variety of things to be
able to keep improving Indonesia's competitiveness, among others, related to infrastructure,
high economic costs, transportation costs, and other macro sectors. (Mari Elka Pangestu,
2010, interview in Media Indonesia, 23 February). Because even if the government delayed
implementation of ACFTA for a certain time for certain products, ultimately protection
should also be removed as agreed. If the government violated the agreement and protect
domestic industry, consumers are harmed because they have to pay for products at higher
prices and the economy is not growing.
Hence, the government still approved the ACFTA as it should for the sake of good
governance. But the question that arises then, whether the solution offered in overcoming
the problems that arise due to the ATCA? Then is it true ACFTA will form a good
governance?
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ACFTA
The Impact to Indonesia
II. DISSCUSSION
A. Definition
a. Good Governance
Terminology Good Governance (GG) in the language and understanding of some of
the elite of society, including politics, is often ambiguous. At least three are often
ambiguous terminology that is good governance (good governance Balk), both the
Government (Governance Balk), and good governance (good governance).
Good Governance by the World Bank (World Bank) is a way resources used in
managing a variety of social and economic resources for community development
(The way state power is used in managing economic and social resources for
community development).
Good Governance is synonymous with the implementation of development
management, that (5 Principle):
 solid and responsible for the democracy New articles online and efficient markets;
 avoid any allocation and investment is limited;
 prevention of corruption either politically or administratively;
 run the discipline of the budget;
 the creation of political and legal framework for the growth of entrepreneurial
activity
According to UNDP, Good Governance Practices are defined as the application of the
management authority of various matters, state enforcement of political, economic,
and administratively at all levels.
In the above concept, there are three important pillars of good governance namely:
1) Economic governance (read: welfare of the people);
2) Political Governance (read: the process of decision making);
3) Government Administration (read: corporate governance policy implementation).
In the process of defining the role of stakeholders (stakeholders), including 3 domain
of good governance, namely: 1) Government (role: to create a climate conducive
political and legal), 2) private sector (Role: creating jobs and income) 3 ) General
(role: encouraging social interaction, economic, political and invite all community
members participate).
In the implementation of Good Governance, basing 9 basic principles, called the
Principle GG UNDP has developed in Indonesia, namely: participation, rule of law,
transparency, responsiveness, consensus orientation, equity, effectiveness and
efficiency, accountability and strategic vision.
GG Indonesian version
Good Governance, when we peel: "Good" is the meaning of the values that uphold the
will of the people and improve their ability to dim the achievement of objectives and
the efficient and effective in performing their duties to achieve that goal.
"Government" means the government to function effectively and efficiently in order to
achieve the national goals outlined in paragraph IV of the 1945 Constitution.
What are the basic values that exist in Indonesia? Consensus agreement, uphold
morals, be open, responsive, maintaining unity, social justice, work sharing,
responsible, and willing to sublime. The nine cities this value when the association
with 9 basic principles will not differ fundamentally.
For example, transparency (already contained in the consensus agreement),
accountability (already contained in the values of responsibility) and so forth.
GG ideal orientation is geared to achieve national goals and the ideal functions of
government, if efforts to achieve national goals effectively and efficiently. National
Objectives (Paragraph IV of the Constitution Preamble 45).
1. Protecting the people of Indonesia and the entire country of Indonesia,
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ACFTA
The Impact to Indonesia
2.
3.
4.
Promote the general welfare;
Intellectual life of the nation,
Participate implement a world order based on freedom, lasting peace and social
justice.
Thus, the GG version of Indonesia, is defined as the practice of democratic governance
and the ability to manage a variety of resources that are social and economic interests
by Balk to the maximum people of Indonesia based on the principles of deliberation
and consensus. While his form in Indonesia in the form of the implementation of clean
government and authoritative, efficient and effective, responsive and responsible, act
and side with the interests of the people, and able to maintain a harmonious
partnership through a process of dynamic and constructive interaction between
government, communities, and various groups interest in the way of life of Indonesia
based on Pancasila.
1) Packaging form of the paradigm of good governance in this country, reflecting the
emphasis the main points of policy that covers four areas, namely:
Political: the position of the government as a facilitator, encouraging dialogue,
interactive, and impetus for the development of political institutions and
traditions;
2) Governments in the country: the recognition of the regional authority (except the
center), separation of executive and legislative areas, as well as overseeing the
development dynamics of the Unitary Republic of Indonesia;
3) Community participation: encourage local initiatives continue to develop and
encourage the maximum roles of social institutions;
4) Regional Development: provide orientation pressure, regional / local, said the
main problem areas / regions, and strengthen cooperation within or between
regions.
Contextual National Leadership
To achieve national goals (Indonesia an independent, united, sovereign, just and
prosperous, as in the Preamble II Aline 1945) and the National Objectives as contained
in paragraph IV of the 1945 Constitution, is required National Strategy.
This National Strategy must be prepared with due regard to the dynamics of the
strategic environment (internal and external) and in accordance with developing a new
paradigm. The process of how national strategies to achieve the ideals and national
purpose still depends on shared factors, the most important is the national leadership
and the spirit of leadership paradigm. Examples of the spirit, today, is growing in
Indonesia in development is a new paradigm with three spirit they contain, namely:
regional autonomy, good governance, and community empowerment. All government
policies in national development will be marked by this spirit in its various forms.
Conceptually, how GG toward national goals will ultimately depend on how efficient
management and effective leadership, basing itself on the principles of GG in the
dynamics and challenges facing development.
While good governance, public administration, or management of power that no
longer solely owned or into government affairs.
Management has said elements governing verb, which means that the functions of
government together with other institutions (NGOs, private sector and citizens) need
to be balanced / equal and multi-way (participatory). Governance without government
means that governments do not always colored by the institution, but included within
the meaning of the governmental process.
Good governance and good governance or good government functions, clean and
respectable (structure, functions, people, structure, rules, etc.).
Clean Government is clean and respectable government.
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ACFTA
The Impact to Indonesia
Good corporate governance is the management company a good and clean.
THE CONCEPT OF GOVERNANCE
Government perspective to implement a reduction of government role, as an institution
can not be abandoned. The question of how the state (government) put yourself and
behave when the last process that set in the context of government? Or how the
government plays a role in managing the state or the public? There are at least six
principles that are offered that can be used as a reference to answer this question,
namely:
a) In a collaboration that was built, the state (read: government) continue to play as a
key figure but does not dominate, which has the capacity to coordinate (not
mobilizing) actors in the institutions, organization of semi-institutional and nongovernmental organizations, to achieve political objectives.
b) State-owned power must be transformed, from the originally conceived as a
"power over" to the "power to" regulate the interests, needs, and solve public
problems.
c) State, NGOs, private sector and local communities is an actor who has the
position and role to balance each other - not to mention equivalent.
d) Countries must be able to redesign the organizational structure and culture to be
ready and able to become a catalyst for other institutions to form a strong
partnership, independent and dynamic.
e) States must involve all the pillars of society at the beginning of the process of
policy implementation, formulation, and evaluation of policies, and provision of
political services.
f) Countries must be able to improve the quality of responsiveness, adaptation, and
public accountability in the administration of the interests, needs, and solve public
problems.
According to UNDP (United Nation Development Program), good governance
has eight principles as follows:
a. Participation
b. Transparency
c. Accountable
d. Effective and efficient
e. Legal certainty
f. Responsive
g. Consensus
h. Equivalent clan inclusive
There is mention of ten principles, similar to the TABLE above,
namely:
a) Participation: citizens have the right (and use) to express opinions, speak The
unity of public policy formulation process, both directly and indirectly.
b) Law enforcement: The law applied to everyone without exception, human rights
are protected, while still maintaining the values of living in society.
c) Transparency: the provision of information about the government (s) to society
and guaranteed by the ease in obtaining an accurate and adequate information.
d) Equality: a long opportunity for every member of society to move / attempt.
e) Responsiveness: response of the managers of public institutions to community
aspirations.
f) Insights into the future: community management must begin with the vision,
mission, and a clear strategy.
g) Accountability: decision makers to report to the citizens.
h) Public scrutiny: the involvement of citizens in controlling the activities of
government, including parliament.
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The Impact to Indonesia
i)
j)
Effectiveness and efficiency: implementation of public agencies to use available
resources optimally and responsibly. Indicators include: the service is easy, fast,
accurate, and inexpensive.
Professionalism: high ability and spirit of the Government employees, including
parliament.
THE CONDITION OF GOOD GEVERNANCE IN INDONESIA
Consolidated Global Competitiveness Report, published by World Economic Form
(WFF), which analyzes the economic competitiveness with the two approaches,
economic growth (OCI) and micro approaches economics (MCI) show that: Ranking
the economic competitiveness of Indonesia (Growth Competitiveness Index / M)
decreased more than the order of the 64th last year (2001) to the order of 67 (from 80
countries) this year, and microeconomic competitiveness (Microeconomics
Competitiveness index / MCI) fell nine levels, from the order of 55 to 63.
Earlier surveys reported in June 2001, conducted by Political and Economic Risk
Consultancy (PERC), put Indonesia in the group with the worst political and economic
risks among 12 Asian countries with Vietnamese and Chinese.Viewed from the
world's needs for business and investor confidence that demand good corporate
governance based on principles and internationally accepted practice (International
Best Practice), the establishment of the National Committee on corporate governance
policies recognize the National Committee on Corporate Governance (NCCG) on the
moon in 1999 August is an important milestone in the history of GG in Indonesia.
Furthermore, observers try to assess the level of good governance in Indonesia, he
concluded that there are some questions to consider, if Indonesia will create good
governance, among others:
 How is the relationship between the government and people.
 How does the culture of public service.
 How corrupt practices.
 How is the quantity and quality of conflict between levels of government.
 What is the condition in the district, province / city.
From studies conducted later to find the characteristics of bad governance, inefficient
and ineffective, with the following characteristics:
1) Relations between the government and people of all countries patterned
2) Government as the host culture and not as a servant
3) Pathology tendency of government and service learning
4) The tendency of the birth of a strong ethno political
5) Conflicts of interest between governments.
Good governance is an agreement on state regulations that were created jointly by the
government, civil society and private sector. To achieve good governance is needed to
build dialogue between important actors in this country, so that all parties feel a good
arrangement. Without a deal that was born from this dialogue will not be achieved
because the political aspirations and economic welfare of society is blocked.
Good governance is not something new. Prophet turtles have been practicing this kind
of government in Medina. In various parts of the archipelago, such as in West
Sumatra, Bali, and many other areas of traditional society has adopted good
governance. The concept that is now packed in modern words have actually been
implemented since the first at the village level in almost all regions in Indonesia.
According to UNDP Policy Document:
Good governance is the use of economic power, politics and administration to manage
state affairs at all levels. Good governance includes all the mechanisms, processes, and
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ACFTA
The Impact to Indonesia
institutions where citizens and community groups to express their interests, using legal
rights, obligations and bridge the differences between them.
Source:
Government support of Sustainable Human Development, January 1997 UNDP Policy Document.
b.
ACFTA
1. Definition
ASEAN-China Free Trade Area (ACFTA) is an agreement between member
countries of ASEAN with China to realize free trade area by eliminating or
reducing trade barriers both tariff and non tariff, improve market access for
services, investment rules, as well as aspects of economic cooperation to further
enhance economic relations of the actors within ACFTA in order to improve the
welfare of ASEAN and Chinese society.
2. Legal Foundation
In establishing ACFTA, Head of Member Countries of ASEAN and China signed
the ASEAN - China Comprehensive Economic Cooperation 6 November 2001 in
Bandar Sri Begawan, Brunei Darussalam.
As a starting point for the formation of the two sides signed a Heads of State
ACFTA Framework Agreement on Comprehensive Economic Cooperation
Between ASEAN and China in Phnom Penh, Cambodia on November 4, 2002.
Framework Agreement Amendment Protocol signed on October 6, 2003, in Bali,
Indonesia. Framework Agreement Amendment Protocol was signed on December
8, 2006.
Indonesia has ratified the Framework Agreement Ratification of the ASEAN-China
FTA through Presidential Decree No. 48 of 2004 dated June 15, 2004.
After an exhausting negotiations, formally ACFTA first released since the signing
of the Agreement for Trade in Goods and the Dispute Settlement Mechanism
Agreement on 29 November 2004 in Vientiane, Laos.
ACFTA Services Agreement signed on 12th ASEAN Summit in Cebu, the
Philippines, in January 2007. While China signed the ASEAN Investment
Agreement at the 41st meeting of the ASEAN Economic Ministers August 15, 2009
in Bangkok, Thailand.
National regulations relating ACFTA
 Indonesia Presidential Decree No. 48 of 2004 dated June 15, 2004 on the
Ratification of the Agreement on Comprehensive Economic Cooperation
Between the Association of Southeast Asean Nations and People's Republic of
China.
 Ministry of Finance of the Republic of Indonesia Number 355/KMK.01/2004, 21
July 2004 on the Determination of Customs Tariff on Imports of goods within
the framework of Early Harvest Package of ASEAN-China Free Trade Area.
 Ministry of Finance of the Republic of Indonesia Number 57/PMK.010/2005, 7
July 2005 on the Determination of Customs Tariff in order to Normal Track
ASEAN - China
Free Trade Area.
 Ministry of Finance of the Republic of Indonesia Number 21/PMK.010/2006, 15
March 2006 concerning the Determination of Customs Tariff in order to Normal
Track of the ASEAN-China Free Trade Area.
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ACFTA
The Impact to Indonesia
 Ministry of Finance of the Republic of Indonesia Number 04/PMK.011/2007, 25
January 2007 on the Extension of Determination of Customs Tariff in order
Normal Track of the China-ASEAN Free Trade Area.
 Ministry of Finance of the Republic of Indonesia Number 53/PMK.011/2007
dated 22 May 2007 concerning the Customs Tariff Determination in the
framework of ASEAN-China Free Trade Area.
 Ministry of Finance of the Republic of Indonesia Number 235/PMK.011/2008
December 23, 2008 regarding Customs Tariff Determination in the framework
of ASEAN-China Free Trade Area.
3. Objectives ACFTA
 Strengthen and enhance economic cooperation, trade and investment among
member countries.
 progressively liberalize and promote trade in goods and services and create a
transparent system and to facilitate investment.
 Exploring the field of new partnerships and develop appropriate policies within
the framework of economic cooperation between member states.
 Facilitate a more effective economic integration of new members of ASEAN
(Cambodia, Laos, Myanmar, and Vietnam - CLMV) and bridge the economic
development gap between member countries.
4. Trade in Goods Agreement
In ACFTA agreed to implement full liberalization by 2010 for ASEAN 6 and
China, as well as 2015 to as well as Cambodia, Laos, Vietnam, and Myanmar.
Reducing the level of cooperation within the framework of ACFTA implemented in
three phases, namely:
1. Early Harvest Program (EHP)
 Items in EHP, such as:
Chapter 01-08: Live animals, fish, dairy products, plants, vegetables, and fruit
(Ministry of Finance Decree No. 355/KMK.01/2004 July 21, 2004 About the
Determination of Customs Tariff on Imports of goods within the framework
of ACFTA EHP).
Bilateral Agreement (Certain Products), among others, coffee, palm oil / palm
oil, cocoa, rubber goods, and furniture (Minister of Finance Decree No.
356/KMK.01/2004 July 21, 2004 on the Determination of Customs Tariff on
Imports of Goods in the Context EHP Bilateral FTA Indonesia-China.
 Decrease in tariffs from January 1, 2004 in stages and will be 0% on January
1, 2006.
2. Normal Track
 Threshold:
40% to 0-5% in 2005
100% at 0% in 2010 (Rates in Some products, not more Than 150 tariff lines
will be eliminated by 2012).
 The number of PB II Indonesia amounted to 263 tariff heading (6 digits).
 Legal force of NT for the year 2009 to 2012 have been set by decree. MENkeu Number 235/PMK.011/2008 December 23, 2008 About the Customs
Tariff Determination in the Context of ACFTA.
3. Sensitive Track
 Sensitive List (SL):
(A) Year 2012 = 20%
(B) Reduction to 0-5% in 2018.
(C) The product of 304 products (HS 6 digits), among others, Leather Goods:
handbags, wallets; Footwear: Sport Shoes, Casual, Leather, Glasses, Musical
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ACFTA
The Impact to Indonesia
Instrument, Brass, strings, strings, Toys: Dolls: Sporting Goods, Stationery,
Iron and Steel, spare parts, transportation equipment; Glokasida and
Vegetable Alkaloids; Organic Compounds, Antibiotics, Glass, Plastic Goods.
 Highly Sensitive List (HSL)
(A) Year 2015 = 50%
(B) HSL is a $ 47 Product Product (HS 6 digits), which
among others, consist of agricultural products, such as Rice, Sugar, Corn and
Soybeans; Textile Industry Products and textile products (ITPT); Automotive
Products: Products Ceramic Tableware.
5. Rules of Origin
Rules of Origin is defined as the criteria used to determine the status of origin of
goods in international trade.
In the context of ACFTA, they ensure that only products that meet the requirements
of Rules of Origin under the ACFTA that can obtain tariff concessions.
ASEAN and China have agreed criteria for the substance of goods included in Roo
contain material that is if all member states or at least 40% content of material
derived from the member countries.
ACFTA member countries are negotiating the possibility of specific regulation of
products such as textiles against the adoption of the CEPT process Roo ACFTA.
6. Dispute Resolution
Trade disputes or disputes between businessmen in ACFTA Disputes can be
resolved through the Settlement Mechanism Agreement (DSM) ACFTA.
This agreement aims to provide certainty in the settlement of trade disputes with the
same principles (fair), fast, and effective. DSM Agreement signed by ASEAN
Economic Ministers and China in the meeting of the 10th ASEAN Summit in
November 2004 in Laos.
7. Trade Service Agreement
ACFTA Services Agreement has become effective since July 2007. With the
agreement service providers in both regions will benefit from expanded access to
markets and national treatment service for sectors and subsectors that performed by
each ACFTA actor.
First ACFTA Pack Service Agreement covers approximately 60 additional
subsectors committed the Parties to the ATS / WTO. From the standpoint of the
level of ambition of liberalization, the First Package simply reflect a high level of
commitment from all four modes of service provision both cross-border supply,
consumption abroad, commercial presence and movement of natural persons.
a) In addition to the benefits of services trade flows between both regions
increased, Services Agreement is expected to encourage increased investment,
especially in sectors that have been carried out by the Parties including:
As a computer services business related services, real estate services, market
research, management consultancy;
b) The construction and related engineering services;
c) Tourism and travel related services;
d) Transportation services, educational services;
e) Telecommunication services;
f) Related health and social services;
g) Recreation, culture and sport services;
h) Environmental services, and
i) Energy services.
8. Investment Approval
Through the Investment Agreement, the ASEAN Member Countries and China
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ACFTA
The Impact to Indonesia
collectively agreed to encourage increased facilitation, transparency and
competitive investment regime by creating positive conditions for investment,
accompanied by various efforts to encourage investment flows and promotion of
partnerships for investment. In addition, both parties will also jointly enhance
investment regulations more transparent and conducive to increasing investment
flows.
Also another thing that matters is the ASEAN and China agreed to provide mutual
protection of investment.
These dissemination activities will explain the policies, regulations, rules, and
procedures for investment. One thing is very important, both parties agreed to form
a one-stop center to provide consulting services for the business sector including
the facilitation submission of a permit.
i.
From the perspective of investors, the ASEAN Investment Agreement - China
provided various tangible benefits such as:
guarantee equal treatment to investors from China or ASEAN, among others, in
terms of management, operation, liquidation;
ii. clear guidance on expropriation, compensation for losses and transfers as well
as repatriation of profits;
iii. equality for investment protection in terms of legal and administrative
procedures. In the event of disputes arising between the investor and one of the
parties, this agreement provides a specific resolution mechanisms in addition to
the approval of all parties to continue to ensure equal treatment and nondiscriminatory.
9. Economic Cooperation
In the Framework Agreement on Comprehensive Economic Cooperation Between
ASEAN and the People's Republic of China, both sides agreed to cooperate more
intensively in several fields such as: Agriculture, Technology Information: Human
resource development; Investment; Development of the Mekong River, Banking,
Finance, Transport, Industry, Telecommunications, Mining, Energy, Fisheries,
Forestry and Forest Products forth.
The Chinese government has allocated funds amounting to USD 10 billion in China
under the ASEAN Investment Cooperation Fund to finance cooperation projects
major investments such as infrastructure, energy and resources, communications
and information technology and other fields as well as providing a credit facility of
USD 15 million to support the process of ASEAN economic integration and
cooperation Under ACFTA for five years.
Source:
Directorate of Regional Cooperation - Directorate General of International Trade
Cooperation
B. Relationship Between ACFTA and Good Governance
From the definition of good governance and ACFTA can be concluded that good
governance to increase cooperation among actors in a country to create good governance.
While ACFTA is regional cooperation in creating a favorable climate of economic
competition in which all the actors in the countries involved in the ACFTA to take part.
Thus it can be said that the ACFTA is one form of good governance.
C. Impact, Opportunities, Challenges, and Benefits to Indonesia
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ACFTA
The Impact to Indonesia
a. Impact on the Indonesian economy
In this case, there are positive and the negative impact of ACFTA imposed by
Indonesia.
a) Negative Impact
First: the invasion of foreign products mainly from China can cause damage to
economic sectors that assailed. Whereas before 2009 only Indonesia has undergone
a process of de-industrialization (industrial decline). Based on data from the
Chamber of Commerce and Industry (Kadin) Indonesia, the role of manufacturing
industry has decreased from 28.1% in 2004 to 27.9% in 2008. Next 5 years of
investment gains in the manufacturing sector decreased by U.S. $ 5 billion, largely
triggered by the closure of the business center of strategic SME (small-medium
scale industries). The number of SMEs registered in the Ministry of Industry in the
year 2008 reached 16 806 with the scale of capital amounting to USD 1 billion to $
5 billion. Of these, 85% of them will have difficulty in facing the competition with
products from China (Bisnis Indonesia, 9/1/2010).
Second: the domestic market that was bombed by foreign products with quality and
competitive pricing will encourage domestic entrepreneurs to move the business
from producers in various sectors of the economy become importers or traders only.
For example, the price of textiles and textile products (TPT), China is cheaper
between 15% to 25%. According to the Vice Chairman of the Indonesian Textile
Association (API) Ade Sudrajat Usman, the difference in value of 5% only make
throe local industry, let alone a big difference (Bisnis Indonesia, 9/1/2010). It is
very possible for local entrepreneurs to survive is to be pragmatic, that is turning
from textile producers become importers of Chinese textiles or textile traders at
least
Put simply, "Why produce textiles when not able to compete? Import better
Of course, cheap and not bother if it produced its own. "
These symptoms begin to appear since the beginning of 2010. For example, herbal
traders are very pleased with the flood of Chinese herbal products are legally that
the price is cheaper and considered more powerful than the local vegetation. As a
result, local herbal manufacturers threatened out of business.
Third: the character of a strong economy in the country will become less
independent and weak. It all depends on foreigners. Even products "crap" like a
needle just to be imported. If many economic sectors dependent on imports, while
the vital sectors of the domestic economy has also been encroached upon and
controlled by foreigners, then what else could be expected from Indonesia's
economic strength?
Fourth: if in the country can not compete, how can the products of Indonesia has a
great ability to compete in ASEAN markets and China? Data show that the trend
growth of Indonesian non-oil exports to China 2004-2008 only 24.95%, while
China's export growth trend to Indonesia reached 35.09%. Even if Indonesia's
exports could be increased, which is likely to grow is to export raw materials
instead of processed products such as value-added exports of industrial products.
This pattern was even admired by Chinese people who are "thirsty" raw materials
and energy sources to drive its economy.
Fifth: the role of production, especially in manufacturing industries and SMEs in
the national market will be cut and replaced by imports. As a result, the availability
of jobs decreases. However, every new year the labor force increased by more than
2 million people, while the period of August 2009 alone the number of open
unemployment in Indonesia reached 8.96 million people.
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ACFTA
The Impact to Indonesia
b) Positive Impact
First: ACFTA will create an opportunity for us to attract investment. The result of
this investment can be played again for exporting goods to countries that do not
become participants ACFTA.
Second: with ACFTA to increase trade volume. This is motivated by tight
competition among producers. So that manufacturers and importers to increase the
volume of trade that can not be separated from the source quality.
Third: ACFTA will have a positive impact on SOE earnings projections in 2010 in
the aggregate. But besides that net income factor, the percentage pay out ratio also
determines the amount of dividend income on the profits of SOEs. this optimism,
since the AC-FTA, SOEs will be able to take advantage of cheaper capital goods
and sell products to China with a lower rate as well (the exposure of former Finance
Minister Sri Mulyani said in a meeting with House Commission VI ACFTA the
House of Representatives, Wednesday (20 / 1).
The bulk (91 percent) of government revenue to the state revenue currently comes
from state-owned mining sector, financial services and banking and
telecommunications. SOEs will require imports of capital goods are quite
significant and can sell multiple products into the Chinese market.
b. Chance
 Improved access to export markets to China to lower tariff rates to the national
product.
 Promoting cooperation between businessmen in both countries through the
establishment of "Strategic Alliance".
 Improved access to service markets in China for national service providers.
 Increased foreign investment flows from China to Indonesia.
 Opening of technology transfer between businessmen in both countries.
c. Challenge
 Indonesia should be able to improve efficiency and effectiveness of production so
as to compete with Chinese products.
 Creating a conducive business climate in order to improve competitiveness.
 Apply the rules and transparency of investment rules, businesses are efficient and
friendly.
 Improve the ability in the mastery of information technology and communication
including marketing promotion and lobbying.
d. Benefits
 Opening market access of agricultural products (Chapter 01 s / d in 2008 to 0%),
Indonesia to China in 2004.
 Opening market access to Indonesia's exports to China in 2005 which received an
additional 40% of the Normal Track (± 1880 rates), which lowered tariff rates to 05%.
 Opening market access to Indonesia's exports to China in 2007 which received an
additional 20% of the Normal Track (± 940 tariff), which lowered tariff rates to 05%.
 In 2010, Indonesia will gain additional market access for exports to China as a
result of the elimination of all tariffs in the Normal Track China.
 Up to the year 2010 Indonesia will eliminate tariffs 93.39% (tariff heading 6683 of
a total of 7156 postal rates are in the Normal Track), and 100% in 2012.
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The Impact to Indonesia
D. Solutions to Overcome Adverse ACFTA
There are several solutions that can be considered, some of the solution given by some
figures.
First is the solution of Emil Abeng
President Director of PT Energi Walinusa and Junior Chambers Vice President of
Indonesia
He said that there is no short term solution that can handle it, because it has become a
problem ACFTA cumulative. He offers solutions, including:
First, we need an agency that is responsible to bring Indonesia into the era of free trade
ACFTA. In principle, this institution is to ensure adequate skills and preparation for this
nation to face free competition, especially with China. Parliament itself felt the need to
establish working committees after seeing ACFTA preparation process, the government
is not ready and not transparent.
Second, Indonesia needs to build lasting benefits and long term (sustainability,
competitiveness). Need to involve and cooperate with all parties, including private
economic actors and the legislature for a long way thinking can be transformed into the
mindset of the future face ACFTA.
Third, development of infrastructure, especially electricity to be absolute and can not be
postponed again, as the main requirement increased competitiveness. private sector's role
is absolutely necessary. Private investment in electricity is not currently attractive.
Reorganization of bureaucracy in order to reform the bureaucracy should also be
accelerated. All the parameters of efficiency, such as licensing, land use, until the cost of
taxes and levies, must be seriously restructured. No less important is the rule of law to
ensure a conducive investment climate.
Second, the solution of Irawan Febianto, FE Management Lecturer UNPAD Sharia. He
offers the following solutions:
1) Providing education to the public to love domestic products while continuing to
improve the quality of products in our country so that more qualified to host in our
own country.
2) Against and minimize the high costs of economic variables such as extortion in
determining the selling price. Factors in addition to technology issues our industry is
still far behind and the problem of government subsidies that are too "indulgent"
products of Indonesia, occupies the main issues that haunt our manufacturers.
Therefore, eradication of various forms of corruption, including extortion, should
continue to be done.
3) Making non-tariff barriers. As a foreign product standardization accepted Indonesia.
This not only includes the certification of halal food products and cosmetics, but also
in textile products, medicines, and so forth. If textiles and Chinese medicines contain
harmful substances and banned then we reserve the right to reject it.
4) Enlarging the volume of all economic activity based on the principle of Justice of
Islamic economics. In Islam, known economic concept of Islamic economics. In
Islamic economics, the concept of fair trade enforced. The concept of fair trading in
Islamic economics is a fair trade. The principle of justice in Islam is the main port
where the fair is an important requirement for a person of devotion and closeness to
Allah SWT. (Q.s. ali imran: 8). Justice in Islam is divided into social justice and
economic justice. Social justice asserted that every human being has the same degree
in the eyes of Allah SWT. and in the eyes of the law. There is no discrimination
between rich and poor, high-low, or black and white. Social justice there will be no
meaning if not accompanied by economic justice. The concept of economic justice
and trade in it, insisted that everyone get their rights in accordance with their
respective contributions in the community and the lack of exploitation of one party
against another party. The rights of individuals in society, both as consumers,
producers, distributors, employees or employers should be protected from all forms
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ACFTA
The Impact to Indonesia
of injustice and exploitation. From these two concepts can be concluded that in
Islam, the problem of injustice, exploitation and danger to society occupy a high
priority on freedom of trade. ACFTA free market is definitely a negative impact as
has been alluded to in the beginning, and ACFTA not a fair trade economy based on
sharia! If the concept of fair trade is applied, then all forms of exploitation of one
party against another party will be eliminated and our nation will get back to human
dignity.
Third, the solution of Daniel Hadinata Saputro, a business consultant and lecturer
Get Real Asian Market Management in S-2 at the London School of Public Relations.
The solution he offered was as follows:
The first stage is the analysis of core competencies. Must know exactly what the core
competencies that are not owned by Chinese. Beware: the core competence is not the
same resources, such as mining, plantations / agriculture, property and infrastructure.
Plantation sector, for example, Indonesia does not have a large land area, but its
output should be encouraged to become more valuable, rare, costly to imitate and
non-substitutable. Therefore, strategic management audit by a third party so that you
know exactly the strengths and weaknesses that exist within the company.
Then, the face of Chinese low-price strategy in four ways. First, run a strategy of
lower prices from China, which is using Cloner, impersonator, adapter (which
exclude the cost of R & D), and the relocation of factories. The second method,
increasing differentiation as a selling post a better service, for example, money back
guarantee, product based on indigenous cultures of Indonesia, hassle free experience,
or a specialization which pamper consumers, especially in the services sector.
The third way, doing innovative products less expensive but good quality with Blue
Ocean Strategy.
The fourth mode, applying the positioning strategy there is no way the price. Chinese
food products known to be dangerous: toxic toys, cosmetics containing mercury,
milk containing melamine, Chinese costume jewelry containing heavy metal
cadmium. Many said batik cloth from China are cheap but the motive is not good,
coarse, and the fabric feels hot when worn on the body, whereas in Solo batik cloth is
good enough, so the quality.
Of course, knowing the characteristics of buyers are very helpful in determining
strategy. Buyers can be divided into three categories: premium, value for money and
the economy. Well, actually a buyer of Chinese products more acceptable economic
and value for money.
Finally, to strengthen mutual help, Optimize fabric of kinship, regionalism and
alumni to build social capital, such as in China. In addition, of course, the
government also must play a more active help domestic industries through strategies
such as non-tariff tighten kosher National Standards, Indonesia labeling, and the use
of Anti-Dumping Committee and Commerce Committee. In addition, the limit
energy exports to meet domestic energy needs, making policy offers tax, reform the
bureaucracy and improve infrastructure.
In addition there are other solutions to domestic industries that could be considered,
especially small and medium industries, such as:
a) Strengthening global competitiveness include the handling of domestic issues
including:
arrangement of land and industrial estates, infrastructure improvements and
energy, providing incentives (tax and non-tax), building Special Economic
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ACFTA
The Impact to Indonesia
Zones (KEK), expand access to venture capital financing and reduced interest
expense (KUR, Food Security and Energy Credit, finance
sharia, factoring, export finance institution Indonesia etc), improvement of
logistic systems, improvement of public services (NSW, PTSP / SPIPISE etc.),
simplification of regulations and labor capacity.)
b) Securing the domestic market through:
i.
monitoring the border by increasing oversight of import and export
regulations in the implementation of the FTA, to implement the Early
Warning System to monitor the initial response to the possibility of
import surges, tightening supervision of the use of Certificates of Origin
(SKA) from the FTA partner countries, initial monitoring compliance
with ISO , labels, ingredients, expiration, health, environment, security
etc., the application of trading instrument that allows the WTO to the
industry which suffered serious losses due to import pressures and
application of instruments of anti-dumping and countervailing duties on
importantions Not Healthy.
ii.
the circulation of goods in the local market include oversight task force
circulation of goods that are not in accordance with the provisions of
consumer protection and industry and the obligations of the use of labels
and manuals in the Indonesian language, and
iii. promoting the use of domestic products with overseeing the effectiveness
of promotion of the use of domestic products (Presidential Instruction
No. 2 of 2009) including KLDI strengthen and clarify the obligation to
maximize the use of domestic products in the revision of Presidential
Decree Number 80 of 2003 on Government Procurement.
c) Strengthening exports by strengthening the role of foreign missions, home
trade development, tourism promotion, trade and investment, overcome the
problem of market access and export cases, monitoring the use of SKA
Indonesia, the increase LPEI role in supporting the optimization of export
financing and trade financing.
d) continuous guidance for stock management KUKM to implement more
adaptive to market differentiation and market that allows cross-subsidy
e) There is a need for ongoing assessment of KUKM more detailed conditions
and various kinds of agricultural products and small industries that have large
market opportunities and can be done specially in the various regions.
f) Need to be given a greater role to the trading house (BLU / or the Parent
Cooperative LLP and Trade) to penetrate KUKM products in various ASEAN
countries and China are conducted regularly, (e.g.: for one month in each
country).
g) It takes coordination and synergy of national and local authorities in managing
products that can be produced KUKM and encourage the use of domestic
production.
h) To consider the integration of the cooperative movement which has a similar
business fields among Asean countries and regions of China (Transnational
Cooperation), so as to develop synergies in order to create resource efficiency
can provide benefits to society
as many dairy cooperatives, etc. in continental Europe.
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ACFTA
The Impact to Indonesia
III.
CONCLUSION
ACFTA is an event of global competition in the field of production of goods or services that
are held in accordance with the agreement of Indonesia and China in early January 2010.
ACFTA implementation caused much debate among the political elite. But the Government
continues to run the ACFTA in accordance with existing procedures in order to create good
gevernance. ACFTA itself is one manifestation of good governance in the field of economy.
However, Indonesia itself is considered not yet ready to accept a fully ACFTA. Defeat of the
Indonesian nation competitive strategies of China who dominate the economy worse off the
competition. The attitude of pessimism Indonesian producers coloring war and made
estimates of the industry of Indonesia to less competitive. ACFTA is deemed too aggressive
to liberalize the economy of Indonesia, which makes Indonesia slump deepened. ACFTA
Positive and negative impact to the Indonesian economy. Besides the negative impact of the
ACFTA can memperpuruk Indonesian economy which could be for the industry Suicide
bomber this country. But there is no doubt that ACFTA also create opportunities for
economic development in Indonesia. There are several solutions offered to overcome the
adverse effects caused by the ACFTA. There is a part has been run by the government and
some are still cultivated. In addition, many figures who also expressed his solution to the
problem ACFTA.
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