The Jakarta Post
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Popular Reads
Top Results
No results found. Please check your search term and try again
Can't find what you're looking for?
View all search results
Popular Reads
Top Results
No results found. Please check your search term and try again
Can't find what you're looking for?
View all search resultsIndonesia in the new landscape of ASEAN integration
Indonesia needs to enhance value chains participation to adapt to the new landscape of ASEAN economic integration.
Change text size
Gift Premium Articles
to Anyone
Share the best of The Jakarta Post with friends, family, or colleagues. As a subscriber, you can gift 3 to 5 articles each month that anyone can read—no subscription needed!
Set as preferred source
F
ifty-four years after the ASEAN Declaration on Aug. 8, 1967, Indonesia plays a strategic role in the region’s economic integration. At the 2003 Bali Summit, Indonesia led the initiative to create an ASEAN Economic Community (AEC) by 2020, which was then accelerated to 2015. At the 2011 Bali Summit, Indonesia headed the introduction of the Regional Comprehensive Economic Partnership (RCEP).
The first phase of the AEC established at the end of 2015 integrated 10 ASEAN member states as a single market and production base, with investments, services, free movement of goods, skilled labor and flow of capital among its key bases. The second phase, under the 2025 AEC Blueprint (AEC 2025), aims to achieve a vision of having an AEC that is highly integrated, competitive, innovative, dynamic and integrated with the global economy.
The RCEP, signed on Nov. 15, 2020, integrates ASEAN with major Asia Pacific economies – China, Japan, Korea, Australia, and New Zealand – into the world’s largest regional trade pact, albeit not the most comprehensive.
AEC 2025 and the RCEP will be the new landscape of ASEAN economic integration, emphasizing regional value chains (RVC) and global value chains (GVC). A broader objective of AEC 2025 to become a highly integrated and competitive economy is to enhance the region’s participation in GVCs. The RCEP, according to its preamble, seeks to establish clear and mutually advantageous rules to facilitate trade and investment, including participation in regional and global supply chains.
Indonesia needs to enhance value chains participation to adapt to the new landscape of ASEAN economic integration. Otherwise, Southeast Asia’s largest economy might not be able to gain optimal benefits from the integration.
Value chains are the system where production and distribution are held jointly by several countries. More complex products and division of labor allow countries to participate in international trade by specializing in specific tasks without the need to produce entire goods. Trade in intermediate goods, connecting different production stages, plays an important role.
The value chains consist of two participation linkages: forward (a country’s value-added export goes into further export of other countries) and backward (foreign value-added in gross export of a country).
