E

ven though the government has tried to help local businesses access a wider market outside Indonesia through free trade agreements (FTAs) with several countries, many businesspeople have not made full use of the trade deals.

A lack of information has resulted in businesses not benefiting fully from the FTAs, with many businesspeople and small and medium enterprises (SMEs) confused over how to access and utilize the trade deals.

Many have no idea that the agreements even exist.

To disseminate information about the FTAs, the Trade Ministry set up on Thursday FTA centers in five major cities, namely Jakarta, Bandung, Surabaya, Medan and Makassar.

The ministry’s international trade cooperation directorate general, Iman Pambagyo, said he hoped that the FTA centers could help in disseminating information about FTAs to help small firms and SMEs across the country.

“We want SMEs [...] to know that we have FTAs with countries like South Korea, Pakistan, Japan and they can make use of the trade deals to export their goods,” he said on Thursday. “With more entrepreneurs in the regions utilizing FTAs, it can boost our exports,” said Iman, stressing that there could be more exporters if more businesspeople were informed about FTAs.

Previously, a 2013 survey-based research study by the University of Indonesia that was published by the Economic Research Institute for ASEAN and East Asia (ERIA) revealed that companies’ knowledge of FTAs was limited.

The research also suggests that information on FTAs is not easily accessible and that the quality of information on them is poor.

With the FTA centers, Iman said he hoped that related parties, from big and small firms to SMEs, would stay informed about FTAs that could benefit them.

The FTA centers will be tasked with disseminating information on FTAs and providing consultancy and advocacy services.

With its consultancy role, the centers are expected to help SMEs or business players understand and deal with export procedural processes, funding and marketing and promotion strategies in the export process. The centers will also play a role as an advocacy center for firms that face problems or disputes related to FTAs.

The FTA centers, which began operating at the end of May, were formed under Presidential Regulation No. 79/2017. Each FTA center has three expert staff members and consultants who are experts on international trade, export processes and marketing and promotion strategies.

To operate the FTA centers, the Trade Ministry is collaborating with several state universities in areas where the FTA centers operate, provincial trade and industry agencies and local business players.

Fernanda Reza Muhammad, an exporter and expert staff member for an FTA center in Surabaya, said the changes were a positive for Indonesia.

“As an exporter, I know that many entrepreneurs and SMEs, especially those in regional areas, have not yet received information about FTAs. FTAs open up access to a huge market of 9.5 billion people outside of Indonesia that we can utilize,” Reza said, adding that it would be unfortunate if FTAs were not utilized by SMEs at the regional level.

Reza, who is also a director at Promosia Group, a Surabaya-based product supplier, said that if more SMEs across Indonesia received more information about FTAs, exports could be boosted.

Around 65 percent of FTAs were utilized for exports in 2016, with the highest contribution coming from the ASEAN–India Free Trade Area (AIFTA), while around 50 percent of FTAs were utilized in the same year for imports, with the highest contribution coming from an agreement with South Korea in AKFTA.

However, growth in the utilization of FTAs for exports was only 8.3 percent, lower than the growth in the number of FTAs used for imports at 11.4 percent.

To boost exports and optimize FTAs, Indonesia is actively exploring other agreement and cooperation opportunities.

As of March 2018, there are nine ongoing reviews or negotiations on FTAs, such as the Economic Partnership Agreement (EPA) with Japan, the Preferential Trade Agreement (PTA) with Pakistan and the Comprehensive Economic Partnership Agreement (CEPA) with the European Union and Australia.

Six agreements are pending the ratification process, including the Indonesia-Chile CEPA signed on Dec. 14 last year. There are 12 upcoming negotiations scheduled with countries such as Sri Lanka, Morocco, Peru, Mozambique, Nigeria and Kenya.