Challenges within ASEAN community

The influx of cheaper Chinese goods in Indonesia following the implementation of the ASEAN-China Free Trade Agreement (ACFTA) can be a signal that the country is not yet well prepared to face free trade.

In a borderless regional grouping like the ASEAN Economic Community (AEC) which the Association of Southeast Asian Nations is going to establish in 2015, the flow of goods will no longer be arranged with a tariff reduction. Goods, investments and other trade commodities will flow freely without any barriers.

The consequence is that countries which are not yet efficient in the production process will suffer from the glut of imported goods on the one hand, and will on the other face difficulties to penetrate overseas market within the region.

Moreover, the levels of economic progress, gross domestic product and per capita income of countries within ASEAN still vary. The more advanced ones like Singapore will definitely take advantage of such an economic community. 

Can Indonesia plunge itself with enough strength into the borderless community within the region? 

"The ASEAN Economic Community is a great challenge for Indonesia. Economically, Indonesia is not yet strong and has to be careful in integrating economic forces in ASEAN. As the ASEAN chair, Indonesia is facing a great challenge to realize it," Adhitya Wardhono, economic observer of the Jember University, said.

ASEAN leaders have declared 2015 as the beginning year of the ASEAN economic community integration with the flows of goods, investment and migrant workers are to be integrated like in one country.

"The AEC will turn ASEAN into a status more than that of the ASEAN Free Trade Area (AFTA) which arranges only tariff reduction for the imports, exports and services. This requires a strong economic structure of the member states," Adhitya said.

As the ASEAN chair, Indonesia should have a strong commitment if it wants to integrate the economies of ASEAN member states. Yet, it would not be able to do it optimally if its own economic conditions at home are still chaotic. 

"The government has the strong and exceptional ambition towards the creation of the AEC in 2015, but the progress of its own economy is still far from that of Singapore and Malaysia," he said.

After all, the Indonesian government is yet to have clear policies and regulations such as business competition and ant-dumping to protect its business players. Thus, it will still face many challenges in the implementation of AEC in 2015.

"If Indonesia is able to improve its economic infrastructure and realize the ASEAN economic integration, the AEC would emerge as an exceptional economic power in the world," Adhitya who is also a lecturer on monetary economy in the Jember University, said.

However, he said, the commitment of ASEAN members to implement an integrated economic community is not yet maximal. Some members are still reluctant to slow down their economic sovereignty in order to balance the economies of other ASEAN members.

In an extreme term, some even exploit others for their individual benefit, according to legislator Fayakhun Andriadi of the House of Representatives (DPR)`s Commission I for defense and foreign affairs.

Fayakhun reminded that it should not happen certain ASEAN members continued to entertain their egoistic attitude for their individual interest, even justifying all means to `exploit` the resources of other member countries. 

"Mutual exploitation should be stopped. Indonesia should take a firm attitude. It should not continue to give in, or to become a loser," the Golkar Party politician stressed in connection with the ASEAN Summit here on May 7-8, 2011. 

He said that through the ASEAN Summit, Indonesia should dare ask ASEAN members to stop their unfair practices. "We have to build common strength for our common progress by abstaining from mutual exploitations for individual interest," Fayakhun said.

He referred to a number of neighboring countries which were trying to capitalize on new values in the free trade system, especially with regard to the World Trade Organization (WTO). "There are many examples of cases which have become a public secret on that matter. Under the cloak of free trade values they turn us a hinterland and exploit us," he said.

Faykhun also reminded that Indonesia and a number of other ASEAN members should not be fooled with scenarios, for example, the open sky policy. "This will benefit smaller country and disadvantage us who have fly zones as spacious as that of European space. This is unfair," he said.

In the trade sector, Fayakhun criticized the fact that Singapore had served as if it was the only gate for Indonesian exports and import. "Why exports and imports are carried out as if there was only one gate. Why can`t them be shipped directly through Tanjung Priok port. Exports and imports carried out through a certain country will benefit it a lot in the form of margin transit gains," the lawmaker said.

He said he did not share the opinion which said that all kinds of trade transactions on commodities or money must be through Singapore because Singapore was an international trade hub.

"We cannot simply be resigned in that way. We should be aggressive in laying down network directly to consumers. It should not happen that we are the producer of a commodity but Singapore is its exporter. This is funny. Singapore is not a nutmeg producer but it is the world`s biggest nutmeg exporter," he said.

If all these unfair problems exist and left unresolved, Fayakhun said he was not sure the idea to establish an integrated economic community and a single currency in ASEAN would be realized.

Yet, it seems, Indonesia is convinced with the AEC scheme. Achieving significant progress in the efforts to form an ASEAN Community by 2015 is one the three main priorities of Indonesia`s policies as this year`s ASEAN chair.

"As the ASEAN chairman this year, Indonesia has three priorities and the first is to ensure significant progress in efforts to establish an ASEAN Community by 2015," President Susilo Bambang Yudhoyono said in his address at the opening of an ASEAN-European Union Business Summit at the Jakarta Convention Center on Thursday

Source: ANTARA