Free Trade Agreement

Indonesia Vows to Assist Citizens Hit by ACFTA
Minister of Trade Mari Elka Pangestu reiterated on Tuesday that the government would no longer pursue a renegotiation of the Asean-China Free Trade Agreement but would focus on seeking ways to help reduce the negative impact on local industries.

“We’ll implement it in line with our commitment,” Mari told reporters while visiting state-owned steel maker PT Krakatau Steel in Cilegon, Banten.

The Indonesian Chamber of Commerce and Industry (Kadin), a powerful business lobby, on Monday urged the government to continue pushing for a partial delay in the implementation of the ACFTA as some local industries were not yet ready to compete with Chinese manufacturers.

Erlangga Hartanto, a senior lawmaker from the House of Representatives’ Commission VI, which oversees trade, also revealed plans to set up a working committee to monitor the implementation of the ACFTA.

Domestic manufacturers had asked the government to seek a delay in implementation of the free trade deal for 228 product categories.

Mari said Indonesia and China had agreed to form a working committee within the next two months to study and formulate measures to help ease the negative impact of the deal on local industries such as steel, textiles and footwear.

From the Indonesian side, the working committee would consist of officials from the Ministry of Trade, Ministry of Industry, Ministry of Finance, Coordinating Ministry for the Economy, as well as industry associations, Mari said.

She added that the committee would also monitor trade developments between Indonesia and China, and that China has agreed to ensure “sustainable” and “balanced” trade relations, meaning that it will import more from Indonesia if its trade surplus continues to widen in the future.

China has also agreed to provide loans and other facilities for capacity building among local industries, Mari said.

“This is a more comprehensive way [to solve the problem] than just struggling to renegotiate tariffs,” Deputy Trade Minister Mahendra Siregar said. ”We should not [get] overly bogged down by the negative impact, but [seek ways] to deal with it.”

Minister of Industry MS Hidayat said it was a “pity” the effort to seek a renegotiation of the trade deal had been abandoned but added that the decision should be accepted.