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December 15, 2008

Indonesia: New Zealand asking too much on trade deal

Indonesia has accused New Zealand of giving “too few” while requesting “too many” special facilities that may harm certain Indonesian industries and cause massive job losses, during an ongoing free trade negotiation that could end in a deadlock, reported the Jakarta Post.

The negotiation is part of an auxiliary deal under the planned free trade agreement (FTA) between 10-member Asean and Australia and New Zealand, agreed upon on August 28, and which will be officially signed by the end of the year.

Sondang Anggraini, the Trade Ministry’s director for Asean, East Asia, Australia and the Pacific, and North and South America, argued New Zealand’s request was too much to tolerate and only offered “peanut” facilities in exchange.

She said New Zealand had asked Indonesia to entirely eliminate import duties imposed on beef and dairy products, covered by 12 tariff lines by 2020, while in exchange offering only 10 doctoral scholarships.

Another offer is financial assistance for three years to improve the skills of Indonesians working in the dairy and beef industries, including veterinarians, Sondang said.

“But we dismiss their offers because scholarships are not among our priorities, and the amount of the financial assistance is so small that I’m ashamed to name the figure,” she told the Jakarta Post.

Beef and dairy products are currently subject to import duties of an average 5 percent. Analysts say the duty elimination would send local dairy and meat producers into immediate bankruptcy because they were still in a developing stage and would not be able to compete against overseas products.

The Agriculture Ministry estimates some 20,000 workers are directly employed in the country’s dairy and meat sector.

Indonesia imported 7,942 tons of meat from New Zealand in the first six months of this year, making it the second largest meat seller in Indonesia after Australia, ministry data shows.

Total imports of meat and carcasses from New Zealand amounted to 64,000 tons last year.

Another offer from New Zealand also includes employing from Indonesia 100 chefs, 100 semi-skilled nurses and oil and gas pipe welders, 20 language teaching assistants and 20 butchers skilled in the halal slaughtering of cattle.

However, Guntur Witjaksono, director of the Manpower and Transmigration Ministry’s international cooperation center, said the New Zealand government was still reluctant to open the door by refusing to guarantee worker placement.

“The New Zealand government refuses to guarantee placement for our future workers there as proposed in the free trade deal, leaving it up to New Zealand employers,” he said.

Guntur expressed disappointment over the New Zealand government’s proposal, comparing it to a deal with Japan under the Indonesia-Japan Economic Partnership Agreement (IJ-EPA), which allows Indonesia to send 220 nurses to Japan during the first year of the deal, with a quota increase each year.

“If these problems are not resolved, I don’t see any good reason for us to have a trade deal with New Zealand.”

New Zealand deputy ambassador to Indonesia Chris Langley would not comment on the issue, saying it was still in the treaty-making process.

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