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Recent Development of ASEAN's Economic Relationship with China and India
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Transcript of Recent Development of ASEAN's Economic Relationship with China and India
Recent Development of ASEAN's Economic Relationship with China and India
By: Hendri Saparini, Ph.DManaging Director
ECONIT Advisory [email protected]
IDEAs WorkshopNew Delhi, 5-6 November 2009
Presentation Outline
• Economic characteristics and its development of ASEAN members, China and India.
• ASEAN China Free Trade Area (ACFTA) and ASEAN India Trade in Goods Agreement (TIG): The Basic Agreement and Current Development
• Trade and Investment between Indonesia – China and Indonesia – India, and their impacts on Indonesian economy.
Introduction
• ASEAN is very aggressive to enter into a Free Trade Agreement (FTA). In fact, the country members of ASEAN have not all been ready to commit in such FTA.
• A review on ASEAN-China and ASEAN-India FTAs is very crucial as ASEAN will have to deal with two economic giants, not to mention that they are highly competitive.
• A review on Indonesia, as one of ASEAN members that has huge economic potentials, is expected to give significant result in form of relationship development pattern, as well as the potential benefit and negative impact from the economic integration on process.
List of ASEAN Free Trade AgreementsAGREEMENT SIGNING DATE EFFECTIVE
ASEAN-Australia-New Zealand Free Trade Area (AANZFTA)
27 February 2009 Preparations are currently being undertaken for the ratification and the subsequent implementation of the Agreement by the parties
ASEAN-China Free Trade Area (ACFTA)
November 2002 The realization of ACFTA in 2010 for Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore, Thailand and China, and 2015 for Cambodia, Lao PDR, Myanmar and Viet Nam.
ASEAN-India Trade in Goods (TIG) Agreement
13 August 2009 The ASEAN-India FTA will see tariff liberalisation of over 90% of products traded between the two dynamic regions. Tariffs on over 4,000 product lines will be eliminated by 2016, at the earliest. The ASEAN-India TIG Agreement will enter into force on 1 January 2010 once India and at least one ASEAN Member State notify completion of their internal ratification process.
ASEAN-Japan Comprehensive Economic Partnership (AJCEP)
April 2008 The Agreement entered into force on 1 December 2008. As of July 2009, Brunei Darussalam, Lao PDR, Malaysia, Myanmar, Singapore, Thailand, Viet Nam and Japan have ratified the Agreement.
ASEAN-ROK Framework Agreement on Comprehensive Economic Cooperation
13 Dec. 2005 The Framework Agreement provides for an ASEAN-ROK Free Trade Area by the year 2008 (with flexibility to 2010) for ROK, 2010 (with flexibility to 2012) for Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore and Thailand, 2016 for Viet Nam and 2018 for Cambodia, Lao PDR, and Myanmar.
Countries Economic Characteristics: ASEAN Needs to Define A Better Strategy
• China is an economic giants to ASEAN
• GDP and Foreign Reserve of China are far above those of ASEAN members
• Trade structure between China and ASEAN members show that Chinese products are highly competitive
• Almost all ASEAN members face trade deficit against China
• Chinese attractiveness for foreign investment is above that of ASEAN members in average.
Economic Growth:ASEAN Behind China and India
-15
-10
-5
0
5
10
15
20
Perc
ent
ChinaIndiaIndonesiaASEAN-5
Source: IMF
GDP Comparison:ASEAN’s GDP only 34% of the Chinese (2008)
5.3
11.2
14.6
27.2
89.8
168.6
181.9
222.2
273.2
511.8
1,209.7
4,401.6
0 500 1000 1500 2000 2500 3000 3500 4000 4500
Lao PDR
Cambodia
Brunei Darussalam
Myanmar
Viet Nam
Philippines
Singapore
Malaysia
Thailand
Indonesia
India
China
Billions of USD
Source: 2008 figure, IMF
GDP Structure:ASEAN members, China and India
20.1
36.1 41.0 45.254.7 54.8
60.967.3 71.1
20.8
13.510.7
12.5
11.6 11.98.4
6.29.7
12.9
44.430.9 19.1
39.728.8 27.8
41.115.2
39.8
8.019.1
23.1
-5.3
2.8 1.1
-16.5-1.8
-20
0
20
40
60
80
100
120
Brunai China Singapore Malaysia India Thailand Indonesia Vietnam Philipina
Per
cent
Private consumption Government consumption Gross domestic capital formation Net Export
Source: ADB
High Growth of FDI in China:Impact of Economic Reform
(20)
-
20
40
60
80
100
120
Billi
on U
SD
China
ASEAN
Indonesia
India
Source: UNCTAD
FDI Inflow (1998-2008): China is far Above ASEAN
Source: UNCTAD
1.0
3.3
3.7
8.4
17.4
20.3
29.2
33.5
47.8
75.3
190.0
396.4
677.2
0 100 200 300 400 500 600 700
Lao People's Dem. Rep.
Myanmar
Cambodia
Brunei Darussalam
Philippines
Indonesia
Vietnam
India
Malaysia
Thailand
Singapore
ASEAN
China
Billion USD
Exports and Import:Huge Surplus of China’s International Trade
Source: Asean Economic Community Chartbook, 2008
0.8
4.4
6.6
8.8
49.0
61.8
137.0
175.0
194.5
241.4
187.4
879.3
1428.5
0 200 400 600 800 1000 1200 1400 1600
Lao PDR
Cambodia
Myanmar
Brunei Darussalam
Philippines
Viet Nam
Indonesia
Thailand
Malaysia
Singapore
India
ASEAN
China
Billions of USD
ExportsImports
Top 5 ASEAN Exports to China:Dominated by Electonics Parts and Primary Commodities
Automatic data processing machines; optical reader, etc, 7%
Others, 58%
Natural rubber, balata, gutta-percha
etc, 6%
Petrolium oils, not crude, 6%
Palm oil & its fractions, not
chemically modified, 5%Electronic integrated
circuits and microassemblies, 18%
Source: Asean Economic Community Chartbook, 2008
ASEAN Commodities Export to China: Main Source for China’s Demand , 2008
99.9
97
94.8
91.8
89.9
86
84.1
82.9
77.3
76.9
76.7
76.6
75 80 85 90 95 100
Uranium or thorium ores & concentrates
Slag. Dross other than granulated slag
Iron ores & concentrates; including roasted iron pyrites
Alumunium ores & concentrates
Chromium ores & concentrates
Zirconium & articles thereof, including waste & scrap
Iron oxides & hydroxides
compounded rubber, unvulcanised, in primary forms
Ores & concentrates, nes
Zinc ores & concentrates
Niobium, tantalum, vanadium ores & concentrates
Marble,travertine, ecaussines etc
Percent
Source: ASEAN Economic Commonity Chartbook 2009
5 Top ASEAN’s ImportASEAN from China, 2008
Others, 76%
Hot rolled, flat-rolled products of
iron or nonalloy steel, 2%
Automatic data processing
machines; optical reader, etc, 5%Electronic
integrated circuits and
microassamblies, 5%
Parts & acces od computers & office
machines, 6%
Electric app for line telephony,
including current line system, 6%
Source: ASEAN Economic Commodity Chartbook, 2009
Country Commodity Share of total export (%)
Brunei Darussalam Crude petroleum oils 99.80%
Cambodia Palm oil & its fraction 88.80%
Myanmar Dried vegetables, shelled 61.70%
Indonesia Palm oil & its fraction 57.40%
Malaysia Crude petroleum oils 39.70%
Singapore Petroleum oils, not crude 22.20%
Viet Nam Coal; briquettes, ovoid & similar solid fuels manufactured from coal
21.68%
Philippines Parts & access of motor vehicles 18.90%
Thailand Petroleum oils, not crude 6.40%
Source: ASEAN Secretariat Office
Main ASEAN Countries’ Exports to India:India Dependent for Raw Materials (2008)
ASEAN Imports from India (2008)Why being dominated by Petroleum Oils?
Others, 54%Petrolium oils, not
crude , 31%
Electric app for line telephony,
including current line system , 3%
Refined copper and copper alloys,
unwrought, 3%Soybean oilcake & other solid residue, 4%
Diamonds, not mounted or set,
5%
Source: ASEAN Economic Community Chartbook 2009
ASEAN trade with China:Continuous increase of deficit
-0.9 -1.7 -4.3 -2.0 -2.7 -4.0 -2.9 -3.7 -1.5 -6.4 -8.9 -9.9 -15.2-21.4
-40
-20
0
20
40
60
80
100
120
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Billi
on U
SD
Import
Export
Balance of trade
Source: ASEAN Statistical Yearbook, 2008
ASEAN - India Trade:Surplus with Value Added?
0
5
10
15
20
25
30
35
19951996
19971998
19992000
20012002
20032004
20052006
20072008
Billi
on U
SD
Export
Import
Balance of trade
Source: ASEAN Statistical Yearbook, 2008
ACFTA: Gates to Liberalization
• ACFTA was agreed in November 2002. Both sides have targeted the realization of ACFTA in 2010 for Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore, Thailand and China, and 2015 for Cambodia, Lao PDR, Myanmar and Viet Nam.
• Under the ACFTA, tariffs on certain products as known as the Early Harvest Program (EHP), were reduced before the onset of the FTA (came into effect on 1 January 2004).
• Others agreements by sectors have also been agreed under ACFTA.
Agreements Under ACFTA #1
• The ASEAN-China MOU on Strengthening Sanitary and Phytosanitary (SPS) Cooperation was signed in November 2007.
• ASEAN-China MOU on Agricultural Cooperation in November 2002 in Phnom Penh; a more direct cooperation in the agricultural sector between the lead national agencies in ASEAN and China. An extended ASEAN-China MOU on Agricultural Cooperation for 2007-2011 was signed in January 2007 in Cebu.
• ASEAN and China strategic partnership in Information and Communications Technology (ICT) to promote international cooperation in terms of investment in human resources development on ICT and to explore the possibility of establishing Greater Mekong Sub-region (GMS) information highway.
Agreements Under ACFTA #2
• ASEAN and China cooperation: the MOU on Transport Cooperation in November 2004 in Vientiane, promoting: i) transport infrastructure construction; ii) transport facilitation; iii) maritime safety and security; iv) air transport; v) human resources development; and vi) information exchange.
• The 7th ASEAN-China Maritime Transport Agreement (ACMTA), November 2008 agreed in principle with the Strategic Plan for ASEAN-China Transport Cooperation, identifying transport infrastructure projects aimed at enhancing international and cross-border transportation and facilitation.
Early Harvest Product
Source: ASEANSEC
HS Description
01 Live Animal
02 Meat and edible meat offal
03 Fish, crustacean, molusc, other invrt.
04 Dairy products
05 Products Animal Origin, nes.
06 Live tree and other plant
07 Edible vegetables and certain roots
08 Edible fruits and nuts
Tariff reduction on ACFTA
Agreement on Trade in Goods of the Framework Agreement on Comprehensive Economic Co-operation ACFTA starting on January 1, 2005
X= Applied MFN Tariff Rate
ACFTA Preferential Tariff Rate (Not later than 1 January 05)
2005* 2007 2009 2010
X > 20% 20 12 5 0
15% < X < 20% 15 8 5 0
10% < X < 15% 10 8 5 0
5% < X < 10% 5 5 0 0
X < 5% Standstill 0 0
Average Tariff Applied (2007) * #1
Industry Vietnam India China Thailand Malaysia Indonesia
Agriculture and hunting 20.1% 28.2% 15.9% 21.0% 5.0% 4.8%
Chemicals and chemical products 4.4% 7.9% 11.2% 3.4% 2.1% 4.3%
Coke, petroleum products and nuclear fuel 5.8% 8.2% 7.1% 3.0% 0.1% 3.2%
Electrical and electronic equipment 14.0% 6.0% 14.6% 7.9% 4.4% 5.0%
Food, beverages and tobacco 36.5% 34.1% 21.5% 23.1% 15.2% 10.2%
Forestry and Fishing (PRODUCTS) 20.5% 24.8% 12.3% 10.8% 1.1% 4.7%
Machinery and equipment 7.5% 7.5% 11.5% 6.2% 4.8% 2.7%
Metal and metal products 9.9% 7.2% 9.3% 6.8% 12.2% 7.0%
Mining and quarrying 4.2% 4.9% 4.6% 1.2% 0.7% 3.7%
Mixed goods (trade data) 5.1% 9.1% 9.1% 5.9% 0.6% 6.1%
Source: ITC*Simple average across all partners countries
Industry Vietnam India China Thailand Malaysia Indonesia
Motor vehicles and other transport equipment 25.4% 18.3% 14.6% 18.8% 10.1% 10.2%
Non-metallic mineral products 25.4% 9.2% 15.9% 7.3% 15.9% 7.5%
Other manufacturing 28.4% 9.6% 20.4% 15.6% 7.8% 10.5%
Petroleum 5.4% 6.1% 2.3% 0.3% 2.0% 3.7%
Precision instruments 11.5% 7.9% 11.9% 5.1% 0.7% 4.6%
Publishing, printing and reproduction of recorded media 22.0% 7.4% 7.2% 8.7% 8.5% 4.4%
Recycling 0.5% 5.8% 2.9% 0.1% 0.5% 1.6%
Rubber and plastic products 19.4% 9.6% 14.2% 10.4% 20.5% 11.6%
Textiles, clothing and leather 41.6% 28.3% 19.2% 13.3% 11.5% 10.5%
Wood and wood products 18.1% 9.4% 8.7% 6.2% 11.4% 4.8%
Average 16.3% 12.5% 11.7% 8.8% 6.8% 6.1%
Source: ITC*Simple average across all partners countries
Average Tariff Applied (2007) * #2
China Financial Aids and Investment: Aggressiveness due to Huge Foreign Reserve
• Investment cooperation fund totaling US$10 billion (infrastructure construction, energy and resources, information and communications)
• Credit of US$15 billion (including loans with preferential terms of 1.7 billion dollars in aid for cooperation projects)
• Special aid of 39.7 million dollars to Cambodia, Laos and Myanmar
• Provide 300,000 tons of rice for to strengthen food security
• Donate 900,000 dollars to the cooperation fund of ASEAN plus China, Japan and the Republic of Korea
• Inject 5 million dollars into the China-ASEAN Cooperation Fund
• Offer of 2,000 government scholarships and 200 Master's scholarships for public administration students
Relationship of ASEAN-China and ASEAN-India
• ASEAN economic is relatively much smaller than China in terms of GDP, which is around 2.9 times of ASEAN’s. It is difficult for ASEAN to compete with China in FTA. Chinese population is 2.3 times ASEAN’s and a very huge market for ASEAN products, but even before FTA ASEAN products can hardly penetrate Chinese market due to lack of competitiveness.
• ASEAN members (excl. Singapore) have similar characteristics, rich of natural resources, but low industrial productivity and competitiveness. This means that they compete each other, rather than complementing. Considering this characteristics, it needs a very hard work to develop AFTA for they are competing in same existing market and not creating a new opportunity.
• ASEAN has already signed a free trade agreement and will be followed by other agreements. ASEAN should develop a joined-marketing strategy to increase their bargaining, for example for CPO, Indonesia and Malaysia are the biggest producers, so they have a very strong position in determining price.
• When ASEAN is able to become a unified economy, then ASEAN will be able to offer an economic cooperation for mutual benefit of ASEAN, China and India. In investment, for instance, it is encouraged to China and India to establish processing industry in ASEAN, so China and India will not only absorb raw materials from ASEAN, but also give higher value added ASEAN.
• Should ASEAN not transform into an economic power, ASEAN would not get more benefit from FTA. Trade and investment after FTA will indeed encourage economic growth, but such growth will not give much value added into the economy. Although exist, value added will only be limited and unable to raise social welfare.
Relationship of ASEAN-China and ASEAN-India
Indonesian Economic Relationshipwith China and India
China, India dan Indonesia: Different Economic Characteristics
• Chinese GDP showed that investment has the biggest share in GDP, while in China and Indonesia the second of the biggest share in GDP.
• China and India focus on exporting manufactured products, not natural resources materials.
• More competitive industrial sectors has made trade liberalization have more positive impact to China and India, otherwise to Indonesia.
• Export of manufactured products, due to more competitiveness and productivity, has an important role in increasing Chinese and Indian foreign reserves.
GDP Structure:Indonesia, China and India
Source: ADB
Per
cent
China India Indonesia-20
0
20
40
60
80
100
120
Statistical discrepancyNet Export
Gross domestic capital formationGovernment consumptionPrivate consumption
Manufacture Productivity and Competitiveness Increasing Foreign Reserve of China
500-
-
500
1,000
1,500
2,000
2,500
19801982
19841986
19881990
19921994
19961998
20002002
20042006
2008
Billi
on U
SD
Source: State Administration of Foreign Exchange Bureau of PRC
Economic Reform:Increasing India Foreign Reserve
0
50
100
150
200
250
30019
90
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Jul-0
9
Billi
on U
SD
Source: Reserve Bank of India
Source: Bank of Indonesia
Indonesia Foreign Reserved:Unstable, Not a Result of Productivity and Competitiveness
2000 2001 2002 2003 2004 2005 2006 2007 20080
10
20
30
40
50
60
Bill
ion
US
D
China’s Export:Focusing on Manufacturing Goods
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
19801989
19911993
19951997
19992001
20032005
2007
Manufactured Goods
Primary Goods
Source: Ministry of Commerce PRC
Primary Product
Source: Reserve Bank of India
India ExportsDominated by Manufactured Goods
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Manufactured goods
Primary products
Indonesian Export:Increasing Shares of Primary Commodity
Source: CBS2002 2003 2004 2005 2006 2007 2008
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Non Primary Commodity
Primary Commodity
Trade Balance Indonesia-ChinaSurplus for Oil & Gas, Deficit for Non Oil & gas
0.501.71 1.12
(3.61)
0.82
-8
-6
-4
-2
0
2
4
6
2004 2005 2006 2007 2008
Billi
on U
SD
Balance of trade Oil and gas Non-oil and gas
Source: Ministry of Trade
1.071.83 1.98
3.334.26
-1
0
1
2
3
4
5
2004 2005 2006 2007 2008
Billi
on U
SD
Balance of trade Oil and gas Non-oil and gas
Source: Ministry of Trade
Indonesia-India Trade Balance Surplus for Non-Oil & Gas, Mainly Raw Materials
Top 10 Exports Indonesia to ChinaDominated by Natural Resources (2008)
Source: CBS
203.6
210.2
230.9
337.0
716.4
742.3
859.1
1,188.8
1,519.3
2,469.0
- 500.0 1,000.0 1,500.0 2,000.0 2,500.0 3,000.0
Aluminum ores and concentrates
Copper wire
Nickel ores and concentrates
Coconut (copra)
Coal
Chemical wood pulp,
Natural rubber,balata,gutta-percha etc
Crude petroleum oils
Palm oil & its fraction
Petroleum gases
Million USD
Palm oil & its fraction, 58%Coal, 17%
Others, 14%
Binders for foundry molds or cores, 2%
Petroleum coke, 1%
Chemical wood pulp, 1%
Natural rubber, 1%
Coconut (copra), 2%
Copper ores and concentrates, 4%
Source: CBS
Top 10 Exports Indonesia to IndiaDominated by Natural Resources, too (2008)
Top Imports Indonesia from China (2008)Mostly Manufactured Products, but Agricultural, too
Source: CBS
81
83
85
87
90
92
93
99
121
125
138
145
147
151
155
181
194
306
- 50.00 100.00 150.00 200.00 250.00 300.00 350.00
Tobacco
Apples, Fresh
Mandarins (Including Tangerines And Satsumas), Fresh Or Dried
Antennas And Antenna Reflectors
Parts For Machinery Making Or Finishing Paper Or Paperboard
Flat-Rolled Products Of Iron Or Non-Alloy Steel
Steam And Other Vapour Turbines
Parts For Auxiliary Plant For Use With Steam
Petroleum Oils And Oils From Bituminous Minerals, Crude
Parts And Accessories Of Motorcycles
Disodium Carbonate
Superphosphates Fertilizers
Aluminum Nonalloyed Rectangular
Garlic, Fresh Or Chilled
Auxiliary Plant For Use With Steam Or Other Vapor Generating Boilers
Parts And Accessories For Automatic Data Processing Machines
Structures And Parts Of Structures Nesoi, Of Iron Or Steel
Portable Digital Automatic Data Processing Machines
Millions of dollar
Others45%
Petroleum oils, not crude13%
Cyclic hydrocarbons
10%
Soya-bean oil9%
Television camera, transmissn app
8%
Cotton, not carded or combed
5%
Semi-finished products of iron
4%
Ground-nuts, not roasted
3%Trucks, motor
vehicles for the transport of goods
3%
Source: CBS
Top 10 Import of Indonesia from IndiaDominated by Manufactured Goods (2008)
China’s and India’s FDIInsignificant in Indonesia
Mauritius43.6%
Joint Countries21.8%
ASEAN12.5%
Japan9.2%
India0.1%
Europe7.3%
Australia0.3%
Other Asia Countries3.3%
USA1.0%
China0.9%
Source: Indonesia Investment Coordinating Board
China, India dan Indonesia: Trade and Investment
• Indonesian trade balance against China and India: surplus for oil and gas, but deficit for non-oil & gas
• Indonesian top 10 export to China and India are natural resources commodities. It is almost 80% for Indonesian export to India and 70% to China
• Import Indonesia from China and India: mostly manufactured products and final goods. Furthermore, on EHP implementation since 2004, Indonesia has imported a huge amount of agricultural products from China.
• Chinese and Indian FDI in Indonesia was relatively insignificant.
• Currently, there is a trend of acceleration of Chinese investment in Indonesia in infrastructure and oil & gas, while India in financial sector.
Contract Year Sector Amount 2004 Bridge US$ 150 million 2005 Oil (SOE) US$ 1.5 billion 2007 Railways (SOE) US$ 200 million
Other infrastructure US$ 600 million 2007 Dam US$ 239.7 million
Other infrastructure US$ 200 million 2008 Oil US$ 642 million
Power Plant (west Java) US$ 481.9 million Power Plant (east Java) US$ 293,2 million Power Plant (central Java) US$ 605,2 million Power Plant (south Sumatra) US$ 330 million Mining US$ 14.4 million Biodiesel US$ 255 million
2009 Emergency US$ 500.000 2009 Steel US$ 500 million 2009 Power Plant 60% of total 10000 megawatt
Power Plant (SOE) US$ 615 million
China Investment to IndonesiaIt Will Increase, Soon
• Indonesia government has received standby loan of USD 5.5 billion and Bilateral Currency Swap Agreement (BCSA) up to US$ 17.5 billion.
• The BCSA scheme will strengthen rupiah value and maintain financial stability, as well as encouraging trade and investment. China trade with Indonesia will be pushed on natural resources and raw materials. Indonesian trade will be continuously dominated by Chinese manufactured products. As China has agreed to provide Special Buyer Credit Facility (SBCF) for Indonesia.
China Loan to IndonesiaIncreased During 2008 Crisis
• China will focus their investment and trade on natural resources and raw materials, as well as infrastructure. On the other hand, Indonesian will be continuously importing Chinese manufactured products.
• This trend will make Indonesia become natural resources and raw materials exporter, as a consequence, employment opportunity growth will be stagnant, even slowing down.
China-Indonesia Trade and InvestmentNeed Improvement for Mutual Benefit
……Before ACFTALow Competitiveness of Indonesian Products
3.4% 3.2%
6.2%
4.1%
1.3% 1.2%
-3.7% -3.6%
-6%
-4%
-2%
0%
2%
4%
6%
8%
2001 2002 2003 2004 2005 2006 2007 2008
Source: CBSGrowth of Textile and Leather Product
Indonesia Exporting Raw Tin ........
China, 45%
Indonesia, 22%
Peru, 13%
Bolivia, 5%
Brazil, 4%Congo, 4%Vietnam, 2%
Others, 5%
Source: CBS
…..But, Increasing Importsof Tin Based Products
0.54
20.35
73.48
169.85
0.31
1.79
42.2
10.61
0 50 100 150 200
Flat-rolled iron or nonalloysteel products, <600 mm wide,
plated or coated with tin
Flat-rolled iron or nonalloysteel products, >600 mm ,
plated or coated with tin, > 0.5mm thick
Flat-rolled iron or nonalloysteel products, > 600 mm
wide, plated or coated with tin,< 0.5 mm thick
Radiotelephony,radiotelegraphy,
radiobroadcasting or television
20032007
Source: CBS
• Prior to FTA, China investment in Indonesia is only in natural resources sectors. Soft loans to Indonesia are mostly aimed at infrastructure development and natural resources. Considering the privatization trend in Indonesia, China will have bigger opportunity to own shares of strategic Indonesian SOE, like electricity, power plant, railway, steel, etc.
• Chinese investment pattern is most likely to be focused on natural resources exploitation and assembling plant for components/parts imported from China, so most of the value added goes to China. If this condition continues to occur, Indonesian and other ASEAN members’ natural resources will be drained. ASEAN members will fail to create competitive and productive industrial countries.
• Evaluating agreements related with FTA and postponement of FTA implementation.
• Immediately prepared industrial policy map road in order to increase national productivity and competitiveness
How to Increase Benefit from FTA