Indonesian businesses unaware of ASEAN single market plan

Many companies in Indonesia are still unaware of the ASEAN member countries’ plan to implement the ASEAN single market within the next two years, a local businessman said.

Chairman of the Indonesian Young Entrepreneurs Association (HIPMI) Raja Sapta Oktohari said that many businessmen, especially those outside Jakarta, for the most part did not understand how the ASEAN Economic Community (AEC), also referred to as the ASEAN single market, would be implemented in 2015

He feared that with such a situation, manufacturers would not be prepared to compete with the influx of goods from other ASEAN members, when the single market takes effect. Although only two years away, it is not too late for the government to inform local industry, especially small- and medium-scale companies, about what implication the free trade agreement will have for their business, he said.

In addition, the government should provide financial assistance - such as cheap loans - to help local companies improve their businesses and prepare them.

“Local business players’ awareness of AEC is still low, but it is inevitable, so we must be ready and beat the competition” he added. 

ASEAN - which includes Indonesia, Malaysia, the Philippines, Singapore, Thailand, Brunei, Vietnam, Laos, Myanmar and Cambodia - agreed in 2007 to establish the ASEAN Economic Community. The free trade agreement will be fully implemented in 2015 by all members, except Cambodia, Laos, Myanmar and Vietnam, which will fully participate in 2018.

Based on ASEAN findings regarding member countries’ readiness for AEC 2015, Indonesia’s score dropped from 77.8 per cent in the 2010-2011 period to 72.6 per cent in 2012-2013 period due to a number of non-tariff barriers imposed by other ASEAN members. Despite the decline, Indonesia must be ready to fully implement the single market concept, the head of subdivision of ASEAN cooperation of the trade ministry, Donna Gultom said.

According to figures from the Central Statistics Agency, Indonesia recorded a surplus balance of trade with ASEAN countries in January, a month when exports hit US$2.83 billion surpassing imports totaling $2.42 billion. 

Edy Putra Irawadi, Deputy Coordinating Economic Minister on trade and industry, said that Indonesia should take advantage of the free trade agreement.

“We have the largest population in ASEAN, natural resources and experience in dealing with an economic crisis,” he added. 

Iwan Suyudhie Amri director for ASEAN Economic Cooperation at the Foreign Ministry commented that Indonesia should benefit from the community as we have a more youthful society than Thailand and other countries.

Furthermore, Bayu Priawan Djokosentono, chairman of the Young Leaders Forum, explained that small- and medium-enterprises (SMEs) must be empowered if Indonesia wanted to face AEC 2015. 

“We have a lot of potential human resources, but they are not well nurtured,” he said, adding that many SMEs are concerned with the time-consuming process of applying for credit to open businesses. 

“It can take three to four months to process a credit application for my business at a national bank but only three to four days at foreign banks. This is so sad, the government needs to assist SMEs in the development of their businesses” he added.

Other ASEAN countries are undertaking various strategies in preparation of the AEC. Malaysia boosted progressive liberalisation, Thailand enhanced the economic development zone as well as opening access to neighbouring countries and Singapore continues to maintain its technology service businesses.-Asia News Network (April 10, 2013)