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recent survey shows that 57.3 percent of respondents believe the ASEAN-China free trade agreement (AFCTA) will disadvantage Indonesia because local products cannot compete with Chinese products.

More than half of the survey’s respondents — 55.1 percent — said they were worried that the domestic market will be flooded by Chinese products.

The survey was conducted by Lingkaran Survei Indonesia from May 1-10 and involved 1,000 people of different genders and from different religious and ethnic backgrounds. The company previously conducted a survey on public perception on the current administration.

Less than 30 percent of the respondents surveyed knew about the existence of the free trade agreement, said M. Barkah Pattimahu, director of Konsultan Citra Indonesia, which is a subsidiary of Lingkaran Survei Indonesia.

The fact that the majority of respondents did not know about the agreement reflected poor dissemination of information by the government, said Agustinus Prasetyantoko, an international economic expert and Atma Jaya University lecturer.

“This also reflects that the government is not ready for the AFCTA,” he said.

The free trade agreement came into effect on Jan. 1. and scrapped Indonesian import duties on Chinese textiles, footwear and leather products, ceramics, food and beverages, iron and steel products, petrochemicals and electronics.

Before the implementation of AFCTA, Indonesia’s trade deficit with China was US$2.5 billion in 2009, a 30.5 percent decrease from $3.6 billion in 2008.

After the agreement was implemented, Indonesia suffered a deficit of $909 million in the first quarter of 2010, slightly under the $927 million deficit recorded in the same period last year.

Prasetyantko said that Indonesia’s unpreparedness to embrace the free trade agreement was related to the weakness in country’s manufacturing industry.

According to an earlier report, the free trade agreement would likely do harm than good and lead to an influx of textile imports into the domestic market, which is already suffering from illegally imported Chinese
textiles.

Prasetyantko said that Indonesia should focus on extractive industries such as palm oil refining and mining, if the manufacturing industry was not yet ready.

“Indonesia has benefited from its free trade agreement with China, one of its major importers, for extractive product exports,” he said. “But we should not rely on extractive products because their prices are volatile and China’s economy is predicted to decline in the second half.”

The only way Indonesia can survive free trade is by improving manufacturing, he said.

“The government must taking steps to improve the competitiveness of the manufacturing industry,” he said.

He said there were four ways to boost competitiveness in the sector: improving infrastructure, bureaucracy, technology and human resources.

Prasetyantko said that the country’s ports and roads were very bad and hindered shipping and handling, and added that Indonesian bureaucracy must simplify the permit application process and be cleansed of corruption. Indonesia’s human development was ranked 111th globally in 2009, just behind Palestine, he added. (map)