RCEP STILL UNPROMISING

The Ministry of Trade was still not in a position to promise that the Regional Comprehensive Economic Partnership [RCEP] would bring maximum result in fostering economic integration within the Asean Free Trade Partnership AFPs. Some countries wished there was commitment to positive list of economic growth. Some countries expected that commitment to strengthening market access be put at negative list.

“The scheme is positive list the way we had applied in WTO meeting. We plan to combine positive and negative list known as hybrid approach.” The Director General of International Trade Cooperation [KPI] of the Ministry of Trade Bachrul Chairi disclosed to Business News [27/10].

AFP’s consisted of Australia, China, India, Japan, South Korea and New Zealand with 10 Asean member countries held a meeting in Jakarta on October 27 – 28 2014. Some meeting agenda was follow up of previous meeting encompassing trade in goods, services and investment [trading, service and investment]. Ex Trade Minister Muhammad Lutfi previously saw RCEP as a form of Asean integration into global, economy. Asean was part of original dynamics and liberalization in trading, service, and investment.

“Each country made a different approach. What we did together at the first meeting in Sydney, was based on different approaches. Some countries were still studying the case. In the end we expect agreement by all member countries, 16 of them”

The Ministry of trade still saw the prospect if RCEP economic value, i.e. USD 21.3 trillion which was equal to 30% of total world’s economy. Total trading volume of RCEP member countries was posted at USD 10.7 trillion or 29% of world’s trading volume. Meanwhile total Direct Foreign Investment [FDI] in RCEP was USD 339.8 billion or 23.4% of world’s FDI. Asean market shares was only benefited by 600 million people.

But if Asean and AFP’s were combined the total population was 3.4 billion. Asean GDP constituted only 45% or USD 2.6 trillion. At RCEP level the potential came to USD 21.6 trillion or equal to 30% of total world’s GDP. Indonesia’s export to RCEP countries constituted 16% addressed to 15 export destination countries.

Indonesia’s import constituted 58% of total import, meaning the role of RCEP countries in trade communication was getting more significant. “The important thing is that 16 RCEP countries are integrated in global value chain. We have seen success story in automotive exporting, global value chain is prevalent in the world market”

The Ministry of Trade simultaneously consolidate commitment for goods and service capitalizing and investment within the RCEP – TNC platform and await for directives by the newly appointed Minister of Trade Rahmat Gobel. After a 3-day meeting in Jakarta, the Ministry of Trade rated that the process was only at the stage of probing for market liberalization for 16 countries. “We are still discussing capitalizing in the second day of meeting, but at interdepartmental stage we have already done exercises toward integrated liberalism.”

The 3-day meeting from October 26 to 28, 2014 in Jakarta was a way to support the 6^th meeting in India next month. RCEP was a forum for implementation of Free Trade collaboration among Asean states plus 6 partner countries. In principle RCEP was also based on Free Trade Agreement [FTA] with extended collaboration with 6 partner states. “Meeting outcome was still subject to directives by the newly appointed Minister of Trade Minister of Trade – which was also related to President Joko Widodo’s Master Strategy Guideline called Nawa Cita. Now Indonesia was determined to be politically as well as economically sovereign. We are looking forward to Indonesia’s new position at RCEP.”

Bachrul saw Trade Minister Rachmat Gobel as industrialist. Naturally the Ministry of Trade could understand trading problems within the context of industry. Certainly the Trade Minister could understand various trading problem within the context of production and marketing. Apparently PT Panasonic, the company that Gobel managed showed outstanding performance, “as we know” Bachrul said, “Panasonic products are in the world market. Panasonic achievement is a reflection of good entrepreneurship of its owner, and Mr. Rachmat Gobel must be well versed with production and marketing strategies. He should be able to give good directives for Indonesia’s positioning at RCEP.”

The Ministry of Trade saw that there were two frame of reference to discuss effort to promote international trading. The first frame of reference was the Asean Economic Community 2015 which was expected to jack up Indonesia’s economic growth by 7% - 8% per year. This target would race neck to neck industrial growth at home. “Ideally industrial growth should grow by 9 percent. More over not all products could be marketed at home. The export market is getting more and more important.”

The other frame of reference was protection of the domestic market. The domestic market must be protected but on the other hand the Government was obliged to reduce obstacles with partner countries. There was no other way to respond to the ever competitive global market by increasing productivity. Indonesia’s export of automotive products had reached around USD 4.5 billion. Two years from now, if performance turned better, export of automotives could reach around USD 5 billion. “In the next 3 years our automotive export could be USD 10 billion. This is part of the projections based on the Asean Economic Community.” (SS)

Business News - October 31, 2014