ASEAN Economic Community (MEA)Indonesia’s Perspective: Service Sector Liberalisation

Kiki Verico (LPEM FEUI)

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ASEAN Economic Community: Challenges

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AEC’s Challenges

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Achievements: Trade & Investment Arrangements in ASEAN

ASEAN Industrial Project

(AIP), ASEAN Industrial

Complementary (AIC),

ASEAN Industrial Joint

Ventures (AIJV), ASEAN

Industrial Cooperation

(AICO) and ASEAN

Investment Area (AIA)

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RegionalClose

(CU/EC)

Anne Krueger, 1970

Bilateral(First mover advantage &

Snowballing effect &

Triggered action)

Open

Regionalism

Jagdish Bhagwati,1995

(RTAs are not effective while

BFTAs are Stumbling Block)

Richard E Baldwin,1997

(BFTAs are Building Block)

Pascal Lamy, 2007

(The ‘pepper in the multilateral ‘curry’)

Ensuring

WTO accession

success

721,181

1i

MTABFTA

• Unilateral

• Multilateral Variance

ASEAN+(A_FTA)

1

3

2

4

65

Sub-RegionalECSC;

IMT, BIMP, SIJORI;

ITRO

Global(MFN)

Source: Verico, Kiki, 2014

Sub-

Regional

Connectivity

H0: AEC will not be achieved throughout regional cooperation

H1: AEC will be achieved throughout A_FTAH0: AEC will not be achieved throughout regional cooperation

H1: AEC will be achieved throughout Sub-Regional

Connectivity

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Open Regionalism(FTA, FTA+)

Trade Creation > Trade Diversion

B: Intra

Investment Creation

C:Less-

Competitive Local Firms of

Member

o Modelo Graph

History of Anti-AFTA,

ACFTA, spirit of Trade Law

Indonesia

Paradox

Close Regionalism

(CU, EC)

B: Extra

Investment Creation

C:Most-

Competitive Firms of

Non-Member

Success story of CU or EC

Changing strategy from non-members

EU

No Paradox

Trade Diversion > Trade Creation

Dilemma FTA, FTA+

Source: Verico, Kiki, 2014

FDI Inflows net ASEAN by Host Country: 2008-2012 (million US$)

7Source: Own Description using GDF-WB data

-40,000,000,000

-35,000,000,000

-30,000,000,000

-25,000,000,000

-20,000,000,000

-15,000,000,000

-10,000,000,000

-5,000,000,000

-

5,000,000,000

10,000,000,000

2008 2009 2010 2011 2012

FDI Inflows net, BOP, current US$, 2008-2012

Singapore Brunei Malaysia Thailand Indonesia Philippines Vietnam Laos Cambodia Myanmar

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Among the top 11-priority products for the ASEAN Economic Community (AEC) 2015

Healthcare, Air transport, Tourism,

e-ASEAN, Electronics, Automotive, Textiles, Wood, Fisheries,

Agriculture in general and Rubber

Bali Concord II :

the ASEAN commitment for the comprehensive trade-investment liberalization in

the AEC 2015 will be started on these 11-priority products

(the Singapore Institute of International Affairs, IISD, January 2007)

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Tourism Related SectorForeign Ownership

Malaysia

100% foreign ownership for Hotel, Restaurant but 4-5 Star Only

IndonesiaMaximum 51% foreign ownership

Philippines

40% for Hotel and 100% for Restaurants foreign ownership

ThailandUp to 49% foreign ownership

Brunei100% Foreign ownership

Myanmar 100% Foreign ownership

Singapore

No Restrictions on foreign ownership in hotel

e-ASEAN (Telecommunication)

Foreign Ownership

Malaysiamaximum of 30%

Thailandmaximum of 49%

Singaporefully liberalized

Philippinesmaximum 40%

Indonesia

maximum 49% for fixed line and 65% of mobile line

Cambodia, Laos Myanmar 100% foreign ownerships are allowed

Vietnam49%-65% foreign ownership

Air TransportForeign Ownership

Indonesia, Vietnam, Thailand

maximum of 49%

Philippinesmaximum of 40%

Laos100% foreign ownership is allowed

Health CareForeign Ownership

Malaysiamaximum 30%

Philippinesmaximum 40%

Indonesia maximum 67%

Thailandmaximum 49%

Laos, Singapore, Vietnam, Cambodia

100% foreign ownership is allowed

Bruneimaximum 70%

Myanmarmaximum 80%

Source: Nikomborirak & Jitdumrong, the AEC: A Work in Progress 2013

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1st – 10th Process of Service Liberalisation in AFAS

1. December 1997 (1st Round: Request & Offer)

2. December 1998 (1st Round: Request & Offer)

3. December 2001 (2nd Round: Common Sub-Sector: if minimum 4 countries then multilaterals)

4. September 2004 (3rd Round: Modified Common Sub-Sector)

5. December 2006 (4th Round: Modified Common Sub-Sector)

6. November 2007 (4th Round: Modified Common Sub-Sector)

7. February 2009 (5th Round: Negotiation according to the AEC Blueprint)

8. August 2011 (5th Round: Negotiation according to the AEC Blueprint)

9. 2013 (5th Round: Negotiation according to the AEC Blueprint)

10. 2015 (AEC)

Source: Nikomborirak & Jitdumrong, the AEC: A Work in Progress 2013

MRA on Sector Detail

Engineering 9-Dec-05

Nursing 8-Dec-06

Archtecture, Surveying 19-Dec-07

Medical Practicioners 26 February 2009

Dental Practicioners 27 February 2009

Accountancy Serivices 28 February 2009

License

from Home

Country

ASEAN

Certification

License

from Host

Country

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Mode 1: Lintas Batas; Mode 2: Konsumsi LN; Mode 3: Keberadaan Komersiil; Mode 4: Mobilitas Manusia

Ishido, 2011

Hoekman Index Indonesia: AFAS: 0,35; ACFTA: 0,04; AKFTA: 0,18 dan AANZFTA: 0,16

Hoekman Index AFAS > 0,5: Jasa Telekomunikasi (0,79), Jasa Pendidikan Dasar Menengah (0,63), Jasa

Rumah Sakit (0,63), Jasa Kesehatan Selain RS (0,75), Agen Perjalanan (0,69), Hotel dan Restoran (0,63)

Dee, 2013

Banking Services (max 51%) in fact 99%; Telekomunikasi (max 49%-51%) in fact 65%-95%

CSIS, Komitmen AFAS Paket 8

Jasa Profesional: Hukum (Pengacara Asing Max 20%), Akuntansi/Audit (max ekuitas 51%), Teknik & Arsitek

(max 51%), Jasa Komputer (max 51%), Jasa Telekomunikasi (49% beberapa 70%), Konstruksi (55%),

Pendidikan (49%), Jasa Lingkungan (51%), Jasa Medis (klinik spesialis, rumah sakit, lainnya, dokter hewan,

perawat, jasa sosial), Jasa Transportasi (max 51%)

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FTA IndonesiaAEC

(2015) ACFTA (2002/10) AKFTA (2005/6) AJFTA (2008)AIFTA

(2010/2013/16/18) AANZFTA (2009) IJEPA (2008)

Goods √ √ √ √ √ √ √

Service √ √ √ √ √ √

Investment √ √ √ √ √ √

IPR √ √ √

CompetitionPolicy √ √ √

DisputeSettlement √ √ √ √ √ √ √

Economic &TechnicalCooperation √ √ √ √ √

ROO √ √ √ √ √ √ √

CustomCooperation √ √ √ √ √

Source: CSIS, 2013

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Hasil OlahanSUSENAS, tw 3, 2012, kor Individu

Sector:B5R30

Recode sector 1=1 2=1 3=1 4=1 5=1 6=1 7=2

8=3 9=4 10=5 11=5 12=5 13=5 14=5 15=5 16=5

17=5 18=5 19=6

01. Pertanian tanaman padi &

palawija

02. Hortikultura

03. Perkebunan

04. Perikanan

05. Peternakan

06. Kehutanan & pertanian lainnya

07 Pertambangan & penggalian

08. Industri pengolahan

09. Listrik & gas

10. Konstruksi/bangunan

11. Perdagangan

12. Hotel dan rumah makan

13. Transportasi dan

pergudangan

14. Informasi dan komunikasi

15. Keuangan dan asuransi

16. Jasa pendidikan

17. Jasa kesehatan

18. Jasa kemasyarakatan,

pemerintahan, & perorangan

19. Lainnya

sector Freq. Percent Cum.

1 55,324 42.40 42.40

2 2,532 1.94 44.34

3 11,028 8.45 52.79

4 365 0.28 53.07

5 59,970 45.96 99.03

6 1,266 0.97 100.00

Total 130,485 100.00

Formal : Informal <SMP:>SMP

Agriculture: 12% : 88% 87% : 13%

Industry : 60% : 40% 36% : 64%

Service : 52% : 48% 48% : 52%

Source: Own Calculation using SUSENAS, 2013

Share of Employment in ASEAN:

Agriculture (44,5%), Industry (19%), Services (36,5%)

Peran Sektor Jasa Indonesia (2012)

Indonesia (net importer jasa, defisit 10,3 Miliar US$) pada

Transportasi (8,7 Miliar), Royalti dan Asuransi (1,7 Miliar

dan 1 Miliar)

Terima KasihThank Youkiki@lpem-feui.org

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