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NEWS UPDATES 18 December 2009

Indonesia: Lower House submits recommendations on Asean-China FTA

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The House of Representatives (DPR) of Indonesia submitted some recommendations to the government on Thursday calling for the postponement of the implementation of the Asean-China Free Trade Agreement (ACFTA) scheduled for January, 2010, reported national news agency Antara.

"The recommendations were submitted with consideration to save the industrial sector in Indonesia which may die soon after the implementation of the ACFTA," chairman of the House Commission IV, Airlangga Hartarto, said Thursday.

He said the recommendations had been handed over to the President by the DPR leadership on December 15 and he hoped the government would immediately send a request for the postponement of the implementation of ACFTA.

The recommendations include demand for the government to ask for the postponement of the implementation of the ACFTA, protection of local products through imposition of non-tariff barriers, imposition of Indonesia National Standard (SNI), obligation for certification of consumer products, strengthening of soft protection policy like what other countries practice including the US.

Others include increasing economic efficiency to create competitive domestic products to compete with imported products, increasing bureaucratic efficiency, improving infrastructure, reduction of bank interest rates and creating conducive investment climate.

Commission IV deputy chairman Aria Bima said the recommendations were submitted to the government following inputs from several industrial associations and workers` unions and also based upon objective conditions.

For the past five years the growth of the industrial sector continued to decline far below the economic growth.

"Under such conditions Indonesia actually is not ready to implement free market like through the ACFTA," he said.

Airlangga said after trade minister Mari Elka Pangestu signed the ACFTA in 2005 and after it was started to be implemented in stages it became more difficult for the country`s industrial sector to challenge competition from China.

Indonesia’s trade balance with China kept decreasing and "even the value of exports of Indonesia`s manufacturing industries which was a surplus of $79 million in 2004 kept decreasing to a deficit of $7.16 million in 2008," he said.

He said the country’s trade deficit would certainly be bigger after the implementation of the ACFTA on January 1, 2010, to make many manufcturing industries in the country to collapse.


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