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House stalls passing RCEP over protectionist concerns
Indonesia is the only country that has yet to ratify the Regional Comprehensive Economic Partnership (RCEP), as lawmakers remain concerned that the agreement could be harmful to the domestic economy.
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Virtual summit: Leaders of ASEAN and its strategic partners are seen on a screen as they attend the fourth Regional Comprehensive Economic Partnership Summit as part of the 37th ASEAN Summit held online from Hanoi on Nov. 15, 2021. (Reuters/Kham)
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ndonesia is the only country that has yet to ratify the Regional Comprehensive Economic Partnership (RCEP), with lawmakers expressing their concern that the world's largest trade deal could trigger an influx of imported goods.
The RCEP eliminates up to 92 percent of the tariffs for goods traded among its 15 members and standardizes many customs, investment, intellectual property and e-commerce regulations. Therefore, the House of Representatives' delay is seen by some as depriving Indonesia of the benefits of the mega trade pact, which came into effect on Jan. 1.
The trade pact involves the 10 ASEAN countries plus Japan, South Korea, China, Australia and New Zealand, which collectively represent 30 percent of global gross domestic product (GDP).
Several members of the House Commission VI, which oversees trade and investments, told The Jakarta Post on Jan. 5 that their concerns were primarily over imported goods and how they could impact local businesses, especially micro small medium enterprises (MSMEs).
“[Indonesia] is still seen as a market rather than the one looking for a market. That’s why at every meeting, almost all members conveyed these concerns,” said House Commission VI member Marwan Jafar of the National Awakening Party (PKB) on Jan. 5.
Fellow member Achmad Baidowi from the United Development Party (PPP) pointed out that many local businesses, particularly MSMEs, might be unprepared to face new competition and have yet the capacity to join global value chains.
“This is one of our concerns — that Indonesia should improve its capability first before ratifying the RCEP,” Achmad said.
