THE SERVICE SECTOR NEED REFORMATION AS COMPETITION HARDENS

The Ministry of Industry was determined to reform the national service industry in line with the ASEAN Economic Community [AEC] which would be effective by December 2015. In AEC, the service sector would be liberalized, meaning workers of Asean nations could be free to interchange locations. The Government must reform the service sector, if Indonesia workers were to compete against workers of other Asean nations. “We will be facing tight competition against other Asean countries. For that matter it is important for us to consolidate in the service sector” Agus Tjahjana, Director General of the International Industrial Cooperation, Ministry of Industry stated in Jakarta on Monday [8/7].

               

Agus rated that the service sector played an important role in National economy. In 2009, the contribution to national GDP was posted at 45%. He mentioned that there were four possible mode in liberalization execution. Firstly, Mode I was cross-border trade, i.e. liberalization which was not followed by movement of workers or related business. Secondly, Mode II was consumption abroad, i.e. liberalization followed by moving of consumers to the origin of service sources to benefit from related service.

               

Thirdly, mode III was commercial presence, i.e. liberalization followed by the service-provider’s step to approach buyers of other countries. Fourthly, mode IV was movement of natural persons which means liberalization followed by moving of workers of the related service sector to another country.

               

According to Agus, based on ASEAN Framework Agreement on Services [AFAS], in 2010 liberalization was targeted to encompass 80 subsectors. However, the target which was part of AFAS 8 was not attained until 2012. Today, he said, ASEAN nations were dissecting AFAS 9 with target to liberate 140 sub sectors. Furthermore by 2015 128 subsectors were targeted to be liberalized; this point was included in AFAS 10.

               

Agus said that he was mapping out strength and weaknesses of national industry. He said that the Government was observing development of labor in Thailand and the Philippines. The point was that the two countries had well established training system. In Thailand, he said, even welders were obliged to command the Indonesia language.

               

Agus disclosed that it was necessary to run a liberalization policy which was clear, focused, and integrated. The Government had prepared some measures to realize the objectives. For example, strengthening of the engineering sector by solidifying professional associations, making infra-structure oriented regulations, and setting up standard of competence in industry.

               

Besides being engaged in collaboration with ASEAN toward AEC 2015, Indonesia also was engaged in bilateral collaboration with India. Deputy Chairman of KADIN in Trading, Distribution and Logistics, Natris Mansur believed that Indonesia would not be disadvantaged by the liberalization agreement between ASEAN and India. Indonesia could not escape liberalization.

               

According to Natsir, of nine service sectors to be opened, only the IT sector was under threat, because in this sector India was superior to Indonesia and it was difficult for Indonesia to play catch up with India.

               

In case of other 8 sectors, i.e. business, R&D, education, maritime, and transportations, telecommunication, construction and technique, finance [non-bank], air transport, tourism and related service, Natris was confident that India would not outsmart Indonesia because so far trade balance between India and Indonesia in these sectors were still surpus on Indonesia’s side. “Meaning, penetration by India’s industrial players would not threaten the domestic industry in the eight sectors” Natsir said. (SS) 

Business News - July 12,2013