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Govt urged to move on new trade, industry law

The Indonesian Employers Association (Apindo) called on the government to begin implementing the newly approved Trade Law and Industry Law to provide legal certainty in preparation for the 2015 ASEAN single market

The Jakarta Post
Jakarta
Thu, February 27, 2014

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Govt urged to move on new trade, industry law

T

he Indonesian Employers Association (Apindo) called on the government to begin implementing the newly approved Trade Law and Industry Law to provide legal certainty in preparation for the 2015 ASEAN single market.

Apindo chairman Sofjan Wanandi said in a press conference at his office in Jakarta on Wednesday that the government should immediately issue implementing regulations for the new law.

 '€œIf we really want to progress [among ASEAN countries], then we need to make sure that we have implementing regulations as the legal basis for the implementation of the [trade and industry] laws,'€ he said.

Apindo expected that the implementing regulations, which usually come as government regulations and ministerial regulations, would be issued before the current government'€™s term ended.

The association specifically called on the government to quickly issue the regulations regarding industrial incentives, holistic policies and enhancement of downstream and component industry.

 '€œIf we cannot work on those issues, we will be unable to compete with companies in other ASEAN countries because our operating costs will be generally higher,'€ said Apindo deputy chairman Franky Sibarani.

 '€œIn Indonesia, for an example, the lending rate for industry reaches 12 percent, far higher than around 5 percent in other ASEAN countries,'€ he said.

ASEAN '€” which includes Indonesia, Malaysia, the Philippines, Singapore, Thailand, Brunei, Vietnam, Laos, Myanmar and Cambodia '€” agreed in 2007 to establish the ASEAN Economic Community, a free trade agreement to be fully implemented in 2015 by all members, except Cambodia, Laos, Myanmar and Vietnam, which will fully participate in 2018.

Indonesian businesses are worried that they would be unable to compete with other ASEAN companies when free trade began due to their high operating costs.

Franky explained that under the new Industry Law, the government was required to establish an industrial financing institution to provide certain incentives for local industry that would increase competitiveness.

Another important issue highlighted by the association was industrial policy, which is sometimes issued by only one government body without consulting related ministries or business players.

 '€œFor example, state-owned electricity firm PLN imposed a 38-percent price hike on electricity for industry, a policy which is considered detrimental to local business players,'€ Sofjan said. For comparison, Singapore and Thailand supported their local industries by giving them subsidized prices for their electricity use, while imposing higher prices on households, he said. He also said that the government needed to boost two particular industrial sectors, downstream and component, in order to reduce raw material imports. (koi)

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