The ever declining volume and value of export had motivated business
players to review the Free Trade Agreement [FTA]. As a matter of fact the
latest development up to April 2013 showed that export of oil-gas and non
oil-gas dropped drastically while import soared up. The result was that
Indonesia suffered serious deficit in trading transaction.
Instead of pinpointing the cause of deficit, business players tend to
blame FTA already agreed by the government. And yet when FTA was made, the
government had communicated beforehand with business players. The fact that
letter on national business people were desperately struggling to hold back
invasion of foreign products into the domestic market indicated that in fact
local business people were not ready to compete in FTA.
For example, when the China-ASEAN Free Trade Agreement was put in effect
in 2010, it was China who was advantaged by FTA. Evidently bilateral trading
between Indonesia and China brought surplus to China. Was CAFTA the culprit to
be blame? Certainly not the one to be accountable for it was the government and
local business people who failed to prepare themselves so when CAFTA was put in
effect it did not bring benefit to local business people.
Allegations come out that FTA to be In effect in Indonesia might pose as
threat to local companies. The consequence of FTA was that imported products
would easily storm the domestic market. Unless well anticipated, it was not
impossible that local producers might run out of business. For that matter the
Government through the Committee for Indonesia Trading Safeguarding [KPPI] were
ready to exercise safeguard. This was the expression of a loser in fair game.
It must be understood that as the world’s market tend to be more open
and free of obstacles, the Government and business people should sit together to
synchronize perceptions, mission and strategy to meet the challenges. This was
a natural process, because each country would exercise international trading by
maximizing export.
All the obstacles, in terms of tariff or non tariff were reduced or
eliminated through bilateral, multilateral ar regional agreements. To
Indonesia, being an exporter country, a condition as such could be advantageous.
The country would have more opportunities to make offerings to another country.
However, the implications would bring negative impact, which would disadvantage
domestic producers, particularly producers who needed imported goods as
component of their products. The competition would be in terms of price or
volume due to free lane principle in the domestic market.
Safeguard was an instrument to be used by members of WTO to secure
producers at home due to import up jump. The objective was to protect natural
interest. In case of serious threat of loss WTO members countries were allowed
to exercise safeguard in terms of extra tariff, restriction of import quota, or
both. The only thing was that the safeguard policy must comply to WTO rules; or
else, unfair trade transactions were bound to happen.
On thing to be understood was that safeguard was the last resort in
tackling import pressures from abroad. In international trade relationship, a
country who exercised safeguard was rated as having serious problem at home.
Their competitiveness weakened against other countries so they had to withstand
invasion of imported products.
In that case what must be done was to strengthen competitiveness of
local products to face regional or global competition. Entry of lemon products
from China was a clear example when it was known that the fruit from China was
cheaper by price compared to local fruits like Pontianak lemon. This was
because transportation cost from China mainland to Jakarta was cheaper than Pontianak
Jakarta route.
Meaning, what needed to be tidied up were logistics, connectivity,
transportation, and delivery time. If these points could be managed well,
prices of local fruits would be competitive against those from China. So it was
unwise to make excuses when all the trouble originated from own weaknesses. As
an Indonesia proverb had it “To blame the floor for not being able to dance”.
To put the blame on others was an unproductive and dangerous act.
What must be done was to identify one’s continuous improvements. Never
give up easily, sand take a short cut solution by opening the import valve. In
the short run, a measure as such was permissible for stabilizing prices and to
control inflation. But be warned, a widely opened import valve would injure
national producers from upstream to downstream.
Finally before reviewing FTA supposedly the government and business
people sit together to pinpoints the plus point and minus point of domestic
products. In case of minus point, improvements would be imperative. All parties
needed not to blame each other as such would be unproductive and counter
productive instead. It would be wiser for all parties to meet and dissect the
FTA case toward win solution.
Amidst the world’s uncertain economic condition, it was necessary to see
prospective acts in disguise by developed or developing nations to protect
their own domestic market through various masquerades with the final objective
of closing access for foreign products. The government and business players better
be cautious in responding to this matter. (SS)
Business News - June 07,2013
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