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3 February 2010

Indonesia: ACFTA transforms smuggled goods into legal imports

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The implementation of the Asean-China Free Trade Agreement (ACFTA) should not cause fear as what would happen is the smuggled products from China would be legalised, national news agency Antara quoted Chatib Basri one of Indonesian finance minister’s experts, as saying.

"We have been worried about something that has actually happened. Chinese products have already been here through smuggling. Now it is mere legalising them," he said after a discussion on the first 100 days of President Susilo Bambang Yudhoyono`s administration and the direction of the Indonesian economy on Tuesday.

He said smuggling of Chinese products occurred because the price in China differed from that in Indonesia due to the imposition of import duties.

With the reduction of duties through the ACFTA the prices of the products in Indonesia would be the same as in China. "If the duties are reduced people will go to legal imports. The impact will be seen in the import data later," he said.

Chatib said the Chinese products had already entered into the country in the last ten years. He said the reduction of duties would not either cause a jump in imports.

"When the duties drop our average duties are actually already low namely seven percent so if they are cut further the impact will not be as fearful as we think," he said.

A senior researcher of the Habibie Center, Umar Juoro, meanwhile said the impact of the implementation of the ACFTA could not be stopped although it could be delayed.

"No matter howlong it will be delayed it cannot be stopped. What has been a problem is that China would not relocate its indutries into Indonesia because they are needed to provide work for its citizens," he said.

In view of that he said the government had to be able to push buinessmen to make use of the market already opened through the ACFTA.

"The challenge would be how to create a selective strategy so that people would get more benefit," he said.


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