Tuesday, 13 March 2012


          Crisis in the USA and Europe turned the Asean region into an alternative market being aimed at as target by many countries. Not just because of the positive economic growth but also because of the high population.

          Some international trade agreements including ASEAN-China Free trade Area (ACFTA) opened door widens by Asean nationals for international trading whereby every country strived to develop their products and services to the maximum.

        In Asia, even before various agreements were signed, China’s products penetrated markets of many countries, starting from simple commodities like needles and hoes to high tech products like electronics and industrial machines, automotives and industrial machines.

            It was still fresh in the mind of consumers that some years ago some motorcycles of China brand (known as Mocin) invaded the Indonesian market with their competitive pricing, although the product turned out to be a failure.

            The free market had been a global trend so like it or not Indonesia had to be part of the game. The point was that if foreign imported product kept flooding in without control, it might as well undermine the nation’s economic strategy.

           One thing was sure landslide of foreign products could bulldoze local commodities in the market; moreover China’s products were offered at prices way below that of local products as they were subsidized by their Government.

            There were too many cases already where Indonesian businesspeople changed profession from producers to traders to be exact traders of China’s products as they were desperately struggling to press down production cost in order to compete with products of China which were cheaper and better by quality.

            It came as no surprise that credit absorption for the trading sector kept expanding; this indicated that more and more producers were changing profession into traders. What was more they only had a little margin to play with, while the added value portion was already taken by producers in China.

            A case study in the province of Central Java showed that import of products from China kept increasing drastically. Latest data had it that the volume of import entering that province rose to 1,700% while export value to China only increased by 70%.

            Total import from China constituted 30% of total import in Central Java. For the most part the imported commodities were electronic goods and toys. Without serious effort, the market in this province would remain to be packed with imported goods.

            In view of such a disheartening condition the Government should control import from China to anticipate disadvantageous impact from China to anticipate disadvantageous impact of flooding goods from China, not just in Central Java but also in other provinces as the phenomenon was spreading nationwide.

          Definitely it was not enough to implement the Indonesia National Standard (SNI) rule on all imported products because even now there were already numerous producers from China who were applying for SNI. Among the thinkable measure was to make it mandatory for exporters of that country to have import ID number.

            As known, China was in fact only in 3rd position as biggest origin of import in Central Java after Saudi Arabia and Singapore but the trend was now increasing to an alarming level.

        On the other hand national producers could in fact learn a lot about competing and strengthening competitiveness, for example by enhancing efficiency and quality whereby to outsell competitors who offered high quality and low price. Still in this case the Government’s support was needed such as in tax exemptions and eased permit application procedures.

            It was not too late for the Government of RI to control invasion of products from China or ASEAN states as long as the Government was resolute about it. Moreover the trend of growing deficit in bilateral trading between Indonesia and China kept on expanding instead of shrinking.

         Naturally the Government was in no condition to wall out foreign products being imported as long as domestic demand was there. It was now homework for the Government and businesspeople to grab the big market opportunity at home by being able to produce commodities of goods quality and affordable price as needed by local consumers.

            There would be regret if the heavy inflow of goods from abroad were getting out of control; under such circumstances it was inevitable that Indonesia would be losing competitiveness in the future, while local consumers would be more in favor of foreign products because local producers we unable to make them.

            Among the type of products of comparative advantage made by local producers were products of the creative industry such as handicrafts, fashion, film, multi-media, audio visual etc. Creative product of high artistic value were highly prospective products at home and abroad. All it takes was determination and will power to carry out the task.

Business News - February 29, 2012

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