Yogya (KU) â€“ Indonesia is ready for China-ASEAN Free Trade Agreement (CAFTA) because the potential of Indonesia's export to China is higher than China's to Indonesia. If Indonesia does not follow the CAFTA agreement with China, Indonesia's market will be threatened by ASEAN products that will benefit from the availability of the cheaper China's raw materials.
â€œThe potential of Indonesia's increased export to China is much higher than that of China to Indonesia,â€ a member of staff to Deputy Head for Business Development and Restructuring in the Ministry of Cooperatives and Small and Medium Scale Enterprises, Ahmad Djunaedi, representing the Minister, Dr. Sjarifudin Hasan, M.M. M.B.A., who was unable to attend the National Seminar on "Islamic Economy on Free Trade Challenges" held at UGM Graduate School on Tuesday (30/3).
Djunaedi said that there are three steps to be taken by the Government in order to help ease the impact of CAFTA. First is to develop domestic market through import prevention in borders and markets. â€œThere will be controlling of importers and controlling at ports. Early monitoring through quarantine will be stringent and so will be controlling of Intellectual Property Rights and Indonesian National Standard, labeling using Indonesian language and innovative products,â€ he explained. Second is to increase competitive products of small and medium micro-businesses. Third is to increase the use of domestic products by promotions and to increase consumer's purchasing power.
Djunaedi mentioned that there are several export products that will be most affected by the CAFTA, among others are leather, metal and manufacturing products, ready-made garments, wheat, sugar, sugarcane, rice, processed rice, and harvesting machines. The Ministry of Cooperative and Small and Medium Enterprises will, therefore, establish innovation centres to develop export-oriented products.
Djunaedi gave an example that Indonesia is the third biggest cacao producer in the world. Every year Indonesia produces as much as 550 thousand tons, but only a third of it can be processed into products. Meanwhile, Malaysia and Singapore that have 300 and 100 thousand tons can process all into products. The export orientation of cacao raw material has made domestic cacao farmers at disadvantage.
â€œThe expensive cacao is the one that has been fermented. But, our farmers are often cheated by traders who explained to them that fermented or not fermented, cacao cost the same. But, we have checked it with the factory directly that there is price difference between 5 - 10 thousand per kilo,â€ he added.
Dr. Tri Widodo, teaching staff from Faculty of Economics and Business of UGM, as speaker in the seminar, said that Indonesia is second in Asia after ChinaÂ in the industrial category that has uneducated workers. â€œWe're the second after China, followed by Thailand, meanwhile the educated industry are Japan and Korea,â€ he ended.