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Ministers Divided On China Trade Pact
Jakarta Globe & AFP | January 20, 2010

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Salimharko
3:54pm Jan 21, 2010

" Mari, meanwhile, defended the trade deal, saying it would be good for domestic exporters and would bring badly needed foreign direct investment from Chinese firms. ".....Perhaps Mari should tell us which country in the world has received so far, in all these years, substantial direct investment from China and of what nature. China don't need cheap labor of Indonesia, its land or capital. It has all the space to absorb as many investment it can without giving back anything except export cheap goods, not all of which are of quality. Facts speak for themselves.

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Industry Minister MS Hidayat and Trade Minister Mari Elka Pangestu offered lawmakers sharply different views of the Asean-China Free Trade Agreement on Wednesday.

Hidayat called for the pact to be renegotiated, saying he feared full implementation would cost many Indonesian workers their jobs, with the steel, textile and furniture sectors among those suffering the most.

“If we do not take protective steps for these industries we are afraid that there will be layoffs and even the closure of those industries,” he said.

Mari, meanwhile, defended the trade deal, saying it would be good for domestic exporters and would bring badly needed foreign direct investment from Chinese firms.

She spoke about benefits arising from “strategic alliances” and “technology transfers” between Asean and China.

However, she also said the government was communicating with Asean in a bid to “find a win-win solution that’s best for national interests,” after local industries expressed concerns about a flood of cheap Chinese imports.

Hidayat and Mari were just two of the ministers summoned by the House of Representatives to explain the likely impacts of the trade deal, and whether it would ultimately hurt or benefit the country. All pledged to work to minimize the harmful effects of the pact.

Finance Minister Sri Mulyani Indrawati, State-Owned Enterprises Minister Mustafa Abubakar and Syarifuddin Hasan, minister for small and medium-sized enterprises, were among those summoned by House Commission VI, which oversees trade and industry.

The trade deal, which took effect on Jan. 1, will scrap import duties on thousands of Chinese products. In recent weeks industry groups and some officials have called for parts of the deal to be renegotiated, to grant Indonesian companies more time to prepare to compete against their Chinese rivals. The deal was signed in 2005. The government has sent mixed signals about whether it would seek to renegotiate.

Sri Mulyani told lawmakers the trade deal would reduce import duties this year by 8.5 percent to Rp 16.5 trillion ($1.8 billion). However, she said revenue from the value-added tax on imports would surge by 54 percent this year, to Rp 102.2 trillion.

After the hearing, the commission asked the government to seek to renegotiate and delay implementation of some aspects of the pact, especially regarding the textile, food and beverage, petrochemical, agriculture machinery, cosmetics, rubber, steel, furniture and engineering sectors.

“The government should come up with a concrete action plan sixth months from now. We do not want any more deadlock,” said Airlangga Hartarto, chairman of the commission.