In a footnote to my entry Tuesday I mentioned that China had overtaken Germany to become the world’s largest exporter. The news comes on the back of the implementation of the ASEAN-China Free Trade Area agreement, which went into effect January 1.
But while the agreement, which was first announced at a summit in 2001 and is the third-largest such agreement of its kind in the world, was broadly welcomed in Southeast Asia as an opportunity to boost exports, it seems the picture is more complex for some member nations.
According to Joe Cochrane, deputy editor of the Jakarta Globe, Indonesia, for one, has failed to prepare its industries for the realities of tougher competition. He told me yesterday:Enjoying this article? Click here to subscribe for full access. Just $5 a month.
‘While there was lots of coverage [in Indonesia] on its impact.no one seemed to write about the fact that [Indonesian officials] had never taken any steps since signing the agreement to get their state-owned enterprises competitive and set up government-sponsored programs to help the private sector improve competitiveness, upgrade equipment, training, techniques, etc.’
However, when casting around for someone to blame, Cochrane told me Indonesian businesses need to take a look in the mirror.
‘This is part of the decades old mentality among Indonesian business that they have some sort of entitlement, and that foreign competition isn’t allowed. Well, in this day and age–with globalization — those things are over. These industries will no longer get carte blanche, but they just can’t seem to accept it. They’re unproductive and not competitive specifically because they had no urgency to become so. And now they’re in deep trouble.’
There have already reportedly been protests in west Java over the agreement, and trade union leaders have called for a formal review. Interestingly, though, although an ASEAN free trade agreement signed with India that went into force the same day seems to have gone down better in Jakarta, it has been worrying Indian policymakers.
The Bernama news site quotes an Indian official as saying:
‘The business community supports the agreement, that is a positive significance but there had been lot of criticism from states like Kerala, such as tea and coffee planters. Now some sectors will surely come under pressure at home.
‘ASEAN will gain substantially from the market access and ASEAN’s exports to India will increase substantially, but our exports will be modest.’