AEC: OPPORTUNITY OR CHALLENGE

The Asean Economic Community [AEC] which would begin in 2015 would pose as new challenge for Indonesia agro-products in Indonesia. It could be and opportunity but also a threat to domestic products. The question was: was Indonesia ready to join the AEC?

The Deputy Minister of Agriculture, Rusman Heriawan on the occasion of the workshop entitled “Readiness of the Agricultural Sector toward AEC 2015” in Bandung on Thursday [18/4] said that in the Asean collaboration there were three underlying pillars opon which the perform, i.e. firstly, Asean political-security community [APEC], secondly, Asean Economic Community [AEC], and thirdly, Asean Social and cultural Community [ASCC].

               

Of the three pillars in terms of politics and security, and social-culture Indonesia was ready and confident, but in case in economy Rusman was uncertain worried because with implementation of AEC trading would be free.

               

Moreover Indonesia had enough experience in free trading; for example when the government of RI signed collaboration contract with the government of china in CAFTA; apparently Indonesia was not ready with the invasion of china’s product.

Many local industry circles were shocked when Indonesia-china free trading started. Unless ready the join AEC, Indonesia would be in trouble because the impact would be instants. Indonesia was a country of vast of market which was being preyed by other countries. With 250 million populations, indonesia’s market was enormous.

               

There was 2.5 years left before 2015; Indonesia still had the chance to prepare for Asean Free Trade. AEC could be an opportunity for Indonesian products in the Asean market, but it could also pose as thereat to Indonesia.

               

“Therefore we panned to set up a team which would formulate and analyze strength, weakness, opportunities and threat of AEC on agricultural products. The team would also prepare an illumination package for business players, especially farmers” Rusman said.

Off farm, not on farm

               

Rusman believed that the main thing to be prepared was not on farm [farmers] but the agribusiness it self because the post harvest period was most important in the competition against overseas products.

               

For that matter the government would enhance the implementation of good agriculture practices [GHP] and good manufacturing practices [GMP]. By meeting the standards Rusman was expecting that agro-products would be able to compete against imported products at home and abroad.

               

“We need not be scarred to death of storming imported products while we are doing nothing to improve quality of domestic products. With AEC we should be combat ready, not just at home but also abroad. “Rusman remarked,

                 

Meanwhile the director of Asean collaboration, Iwan Suyudhie said that of the three pillars agreed upon by Asean countries encompassing politics-security, economy and social-culture and critical matters which directly affected the situation was economic integration [AEC]

               

“We hope that the Indonesian business people would not be shocked by this Asean free trade. The CASTA case must no repeat, because the Asean free market had been agreed upon side 2003.

               

With a little time left, Indonesia must be ready in all market front including agriculture. In the Asean agreement there were 12 sectors being prioritized, namely: agriculture, ICT, textile, forestry, airline business, tourism and logistics service.

               

The psychological handicap among Indonesian was mindset which was still domestic oriented. And yet if we see this whole wide world, there were plentiful of opportunities to be grabbed.

               

Survey run by the standard chartered global research disclosed that the large population of workers at productive age would be supportive to economic growth in the mid term and long term. A condition as such created a vast domestic market with enormous workforce.

               

A vast domestic market would protect Indonesia from external shocks and strengthen national finance. Meanwhile exodus of workers from the agricultural sector to other sectors that promised higher income would strengthen the middle class which was the backbone of indonesia’s super cycle.

                 

Survey of the HSBC global research specitifically mentioned that Indonesia had the best demographic profile among other Asean states as destination of foreign investment. Among others: the fourth largest population in the world which constantly grew from 142 million people to 300 million people by 2050

               

In addition to that a vast number of workforces with people at productive age numbering 165 million people in 2012 would increase to 183 million people by 2020. Indonesia is also rich in natural resources which attracted the export market. “All are huge potentials for Indonesia for Indonesia in facing AEC” Rusman concluded. (SS)  

Business News - April 24,2013