Wednesday, January 27, 2010

Imports from China - Up 33.33%

The Asean-China Free Trade Agreement (ACFTA) has just been effective on 1 January 2010, and in only three weeks the number of containers carrying goods from China that arrived at the Jakarta port have reached 12,359, an increase of 33.33 % compared to similar period last year.

Pos Kota quoted a Public Relations Officer of  the Jakarta port authority as saying that this number is larger than the number of containers that carry goods exported from Indonesia to China during same period which only totaled 9,276.

A member of the People's Representative Council was quoted as saying that the ACFTA is unfair for Indonesia, because the Chinese government provide subsidy for their products making their selling prices much lower than ours. He urged the government to renegotiate the agreement so as to enable our industry prepare themselves. Besides, the Chinese goods must be according to the Indonesian National Standard and bear labels written in Indonesian language.

If this go on uninterrupted, our industries would not be able to compete with much cheaper Chinese goods, and sooner or later they'll be forced to stop production and change business into importing and trading Chinese goods which would be easier and profitable. Their workers would loose their jobs and the number of unemployment would increase drastically.

Considering the above fact, I hope that the government would do its best to renegotiate the terms and conditions of the ACFTA, among others by postponing for at least three years so as to enable our industry prepare themselves to compete with cheaper Chinese products.

10 comments:

tikno said...

If you only focus on low prices, let's take a look at the case of motorcycle competition between Japanese and Chinese brand in Indonesia. Finally the Japanese brand still #1 because its quality and after sale services although its prices more expensive.

We need to see China as a huge market and great opportunity for exporting our products in addition to USA. Let's fight and make any brilliant strategy.

Global trade has become a need and usually based on win-win solution.

Edwin's Personal Blog said...

This is real, to face.. The chinese cheap goods attack is at our doorstep. Who offers cheap, he got it.. There is no other way than empower our own resources to deter them...

colson said...

Of course Indonesian product should beat survive by being more competitive.

Yet the problem with China's authoritarian capitalism is that it's low cost production is possible - apart from efficiency and smart entrepreneurial expertise- by calculated export subsidies and at the cost of extreme exploitation of people and environment.

I think Indonesia has the right - maybe even the obligation- to provide it's own industries with a level playing field. That is: to eliminate the irregular edge of China's export by taxing these imports.

Therefore I tend to agree with the thesis: Indonesia should renegotiate.

H. Nizam said...

Tikno,

Global open market is a powerful trend that cannot be stopped. But in our case, most of the industrial associations that represents manufacturer like steel, textile etc have stated they are not ready now need some years to prepare. Of course we can always accuse them of not preparing many years before because ACFTA has been announced many years ago.

If industrialists are forced they would not be able to compete, stop production and move to China, or Vietnam etc, or stay here and become trader of cheap Chinese products which is more simple an d profitable.

Therefore renegotiation based on win win solution is a must, like you said..

H. Nizam said...

Edwin,

In order to empower our industry we need to give them time to prepare themselves, of course cannot be too long, perhaps 3 years would be okay.

H. Nizam said...

Colson,

The ACFTA deletes import duties, but I am not sure if we can impose other taxes besides regular ones like VAT.

What's now being tried is to require imported goods based their quality on Indonesian national standard & bear Indonesian language labels.
For food, beverage & medicament should be registered with the Dept of Health.

Friends in steel and textile industries told me that we should not be so paranoid about Chinese goods because price is not always the determining factor.

As mentioned by Tikno, facts have shown that cheaper Chinese motorbike cannot compete with more expensive Japanese motor bikes that are made in Indonesia.

But still, I think the best way would be to use our right to renegotiate the conditions especially the time for us to fully participate in the ACFTA.

67 Not Out said...

Arrived via blogcatalog.

Interesting blog. As far as imports from China go, this seems to be happening worldwide. I'm always amazed how many thing I buy, here in the UK, are manufactured in China.

Mike.

H. Nizam said...

67 Not Out,

Thank you for dropping by and sharing with us about your experience in the UK.
Before the FTA became effective on 1 Jan '10, Chinese manufactured goods have dominated our market, toys, electronics, textiles.
After that they would get bigger portion.

umihoney said...

A renegotiation would be one way besides other conditions that imported goods have to adhere to.Pride in using locally manufactured products should also be encouraged and promoted.Great article Nizam :)

H. Nizam said...

Umi,
You are very right my friend, people should be encourage to use locally made products.
Thank you for your supports.