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NEWS UPDATES Asean Affairs        14  April 2011

Indonesia must clarify China FTA problems

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Indonesia needs to define its problems clearly over the trade imbalance with China that has reportedly left billions of dollars in deficits and harmed local industries, an official from the Trade Ministry said.

Gusmardi Bustami, director general of international trade cooperation at the ministry, said Indonesia and China were working together to match export and import data related to differences in trade deficit value recorded by both countries.

“We have a working group on the export sector and we have conducted two meetings in Beijing and Jakarta to talk about matching value trade,” Gusmardi said during a diplomatic forum in Jakarta on Tuesday.

“The Asean-China Free Trade Agreement declared that if there is a huge imbalance between two countries, the surplus country is obligated to help the deficit country. The problem is the data between Indonesia and China is not matched yet.”

However, he said there was no need to renegotiate, insisting the problems must be defined first.

“ACFTA is not a bilateral agreement, but more of a regional agreement with Asean. Therefore, Indonesia cannot perform one-sided renegotations,” he said.

The ACFTA is reportedly the biggest free-trade agreement in the world in terms of population, including a total of 1.9 billion people and a combined gross domestic product of $7 trillion.

The Indonesian Central Statistics Agency (BPS) reported that the nation ran its largest international trade deficit with China last year. Although Indonesia recorded an overall $22 billion surplus in international trade in 2010, the country had a $5.6 billion trade deficit with China.

Zhang Qiyue, the Chinese ambassador to Indonesia, said ACFTA was a good agreement for all parties. She pointed to a growth in trade volume of about 50 percent to $34 billion after the trade deal was implemented as a reason for her optimism.

“I’m not worried about the target because currently the trade volume has reached about $42 billion,” she said.

Zhang said the relationship between China and Indonesia would become stronger with Indonesia’s place as Southeast Asia’s largest economy and the chair of Asean making it an important partner to China.

“I have talked to Indonesian governors and most of them are supporters of ACFTA,” she said. She added that she had assured the provincial governors that ACFTA would bring more opportunities to Indonesia and the rest of Asean.

She said the three primary facets of ACFTA included trading and goods, development of services and investment.

“Based on BKPM [Investment Coordinating Board] data, by the end of last year there were more than 1,000 Chinese companies that were ready to register in Indonesia,” she said. The contracts are worth an estimated $9.7 billion, she said.

As part of the pact, China and the 10 Asean member states must scrap tariffs on about 90 percent of goods. Duties must be cut to no more than 50 percent on “highly sensitive” items by 2015. “We will continue to encourage companies to grow overseas and grow research and development,” Zhang said.

The ambassador also denied claims of Chinese companies engaging in dumping practices in Indonesia. “I do not find any proof of dumping. We are doing a healthy trade and we are against dumping practices,” she said.

Based on data from Ministry of Trade, the value of Indonesian exports to China was worth $15.7 billion last year, up from $11.5 billion in 2009. Indonesia’s imports from China last year were worth $20.4 billion, up 31 percent from 2009.

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It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

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