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Jakarta Post

State-enterprises under threat if Indonesia joins TPP: Experts

  • Anton Hermansyah

    The Jakarta Post

Jakarta   /   Sun, November 29, 2015   /  07:07 am
State-enterprises under threat if Indonesia joins TPP: Experts

President Barack Obama listens as Indonesian President Joko Widodo speaks during their meeting in the Oval Office of the White House in Washington, on October 26, 2015. (AP/Susan Walsh)

Whether Indonesia should join the Trans Pacific Partnership (TPP) is a topic of debate among the public but some economists have said that based on available trade data, joining the TPP may bring benefits to the country.

Berly Martawardaya, an economist with the Institute for Development of Economic and Finance (INDEF), said that out the 12 current members of the TPP, all them had formed free trade agreements (FTAs) with Indonesia, except the US, Canada, Mexico and Peru.

Based on Trade Ministry data, Indonesia'€™s total trade with those countries -except the US- is not significant. In 2014, the share of total trade with Canada was just 1.38 percent, while with Mexico and Peru 0.55 percent and 0.15 percent, and the US 13.04 percent. Berly added that there would be limitations to implement protective policy.

"Our state-owned enterprises [SOEs] will be in under serious threat because until now they are under protective policies such as government tender," Berly told on Saturday.

Former coordinating finance and industry minister Ginandjar Kartasasmita previously said in an analysis published in Kompas on Nov.9 that Indonesia had sufficient FTAs to reach to reach its export targets, namely the ASEAN Free Trade Area, ASEAN-China, ASEAN-India, ASEAN-Japan, ASEAN-South Korea and the future the Regional Comprehensive Economic Partnership (RCEP), which will facilitate free trade among ASEAN+6 (China, Japan, South Korea, India, Australia, New Zealand).

Ginandjar said that rather than joining the TPP, it would be better if Indonesia focused on RCEP, in which Indonesia had a bigger role.

An economist from the School of Economics and Business at the University of Indonesia, Budi Frensidy, said that the government would not be able to force the policy, such as the obligation of local content, since foreign companies would demand equality.

Budi added that the current ASEAN members of TPP shared common traits. "Singapore, Malaysia, Brunei, and Vietnam are countries with a limited domestic market, they need the developed TPP member countries'€™ markets," Budi added.

President Joko "Jokowi" Widodo has mentioned the benefits of joining the TPP, including prompting Indonesia to improve the standard and quality of its products. The competition, he said, would make Indonesia work more efficiently, especially in the face of economic downturn. (dan)



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