VIVAnews - Indonesia is predicted to be invaded by Chinese products if it does not improve its competing power following the agreement of ASEAN-China free trade. Even without the agreement, Chinese products have dominated the Indonesian market.
The statement was conveyed by the Head of Indonesian Young Entrepreneurs Association’s (HIPMI) Trade Division, Harry Warganegara in commenting on the ASEAN-China FTA which will be launched by the government early next year.
Warganegara also said Indonesia should apply several improvements before competing with China. He said the executors of small and medium enterprises (UKM) were not fully prepared to face the free trade because the costs of production and capital are still too high.
“This is the factor which makes the prices of our products unready for competitions,” he said in Nanning, Guanxi, China on Tuesday, December 15.
HIPMI also pointed out that aside from the energy that has not been entirely available, the production costs are still really high because it is not supported by basic materials availability and also because of the existence of illegal retributions, bad infrastructures and high UKM credit’s interest rate with the average amount of above 16 percent.
“Therefore, HIPMI is expecting relevant institutions to implement improvements before facing China who is far more ready to compete,” Warganegara said.
Meanwhile, HIPMI Chairperson Erwin Aksa said the ASEAN-China FTA would generate 1.7 billion consumers in the region with the Gross Domestic Product (GDP) of US$ 2 trillion. The FTA would also create US$ 1.23 trillion worth of trade value.
Population wise, the FTA will be the world’s biggest. “Some of the ASEAN countries like Singapore, Malaysia, Thailand and Vietnam could use this opportunity,” Aksa said.
However, HIPMI assumes radical innovations from the government are required to enable traders, especially the UKM, competing in regional level. They also said there were still many national UKM products having difficulties in competing in national level, let alone regional level.
“Chinese products have been really cheap without the free trade. It’ll be even cheaper” Aksa said.
China holds the third biggest economic power in the world while ASEAN is China’s fourth biggest trade and investment partner.
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Translated by: Nataya Ermanti
