Indonesia to strengthen its TPT before joining TPP
YarnsandFibers News Bureau, 2015-10-12 14:00:00 - Jakarta
The Indonesia government aware of the threat from Trans Pacific Partnership (TPP) toward its manufacturing products especially textile and textile products (TPT) would be focusing on strengthening the competitiveness of the national industry before joining the free trade pact, TPP, said Indonesian Trade Minister Thomas Lembong on Friday.
According to the Indonesian Textile Association (API) data, Indonesia exported textile and textile products worth US$12 billion last year. The biggest markets for Indonesia were the US (36 percent), the Middle East (23 percent), Europe (16 percent), Japan (7 percent) and Southeast Asia (7 percent).
Thomas further added that Vietnam was the main competitor in the textile industry, joined the TPP and it has also recently completed a free trade agreement with the European Union which will make Vietnam’s market bigger since the European Union is composed of 20 countries. So indeed Indonesia has been left behind, Thomas asserted.
Thomas said that by joining the US-initiated pact, Vietnam's products would be more competitive in the Indonesian market in the upcoming ASEAN Economic Community (AEC), starting December 2015.
Indonesia’s textile market in the US and Japan could be taken over by TPP members, he added.
The US along with Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam have joined the TPP trade deal. The 12 countries comprise 40 percent of world trade. This is a major market in the world.
Indonesia’s manufacturers said that they had been concerned since Malaysia and Vietnam joined with eight countries in the TPP agreement.
Secretary-general of the Indonesia Textile Association (API) Ernovian Ismy said that both countries’ products would be more competitive with tariff cuts and less barriers, which in turn would endanger Indonesia’s market share,
But the major concern for President Jokowi, is that it will take two years to pursue the TPP agreement. [Indonesia joining the TPP].
Indonesia to strengthen its TPT before joining TPP
Trans-Pacific Partnership:
Indonesia’s lost opportunity?
Rocky Intan, Jakarta | Opinion | Tue, October 20 2015, 4:40 PM
Opinion News
On Sept. 5, negotiators from 12 countries in the Pacific Rim agreed to a trade agreement known as the Trans-Pacific Partnership (TPP). Although a free trade agreement, it also covers a wide range of issues beyond trade, such as investment, government procurement and intellectual property rights.
The agreement can be influential to world trade, as the economy of its 12 member countries accounts for around 11 percent of the world population and 37 percent of the global economy.
These 12 countries are Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam and the United States.
The pact promises to usher in closer economic relations between members and become a benchmark for future trade deals.
Although Indonesia has at times expressed interest, it has never been a part of the negotiations. And unlike Japan, neither did it join at later negotiating stages. Indonesia is paying a price for excluding itself from the TPP.
First is the lost chance to shape the agreement. The TPP is an open-accession agreement; countries can join it later on. Given its benefits, Indonesia has expressed interest in joining the TPP on separate occasions. But countries that do will not be able to shape the agreed provisions.
By not being a member since the TPP’s inception, Indonesia deprived itself of the ability to mold the provisions according to its national interests. For example, there are reports that some countries were pushing for provisions that afford 12 years of data exclusivity for pharmaceutical patent holders.
As a developing country, Indonesia has an interest to lower this data exclusivity period in order to produce cheaper generic drugs for its populace. Indonesia lost the opportunity to influence this provision by not becoming a TPP negotiating member.
Second is the potential trade diversion from the agreement. A free trade agreement tends to increase trade between members, called trade creation. Conversely, it tends to decrease trade between members and non-members, called trade diversion.
The threat of trade diversion looms especially large between countries of similar profile in their export products. Indonesia, Malaysia and Vietnam are exporters of manufactured goods, such as textiles, automotive parts, tires and electronics.
With Vietnam and Malaysia being members of TPP, producers of such manufactured goods there will gain preferential tariffs and better access to markets in the US and Japan. Better access translates to more orders and production.
Such a threat to textile exports is especially alarming, as the US textile market is the largest for Indonesian exporters, accounting for 36 percent in 2014, according to data from the Indonesian Textile Association.
By being excluded from the TPP, Indonesia’s manufacturing exports might stagnate and lose out to its peers in Vietnam and Malaysia. This also runs contrary to the goal of President Joko “Jokowi” Widodo to reorient Indonesia’s exports from commodities to manufactured goods.
Considering the price Indonesia is paying, one might wonder why the government was not a TPP negotiating member. The perception that Indonesia ‘is not ready’ is often cited as the reason. TPP will require high standards in areas such as trade in services, intellectual property rights, government procurement and investor-state dispute settlement.
Yet this argument can be easily reversed. The TPP can be used as an impetus for furthering Indonesia’s domestic reforms. It can be used as an opportunity to accelerate Indonesia’s service liberalization, strengthen its intellectual property rights regime, ensure efficiency and transparency in government procurement and spur much-needed foreign investment.
The recent announcement by Trade Minister Thomas Trikasih Lembong that the country could join the pact in the next two years is welcome news.
However, as explained in the first point above, Indonesia has lost the opportunity to shape the agreement. This calls for the government to pay attention to the timing of entering a pact and its negotiations.
Yet, on the second point, the government can still prevent Vietnam and Malaysia from grabbing Indonesia’s market share in the US by joining the agreement. Indonesia could still reap the benefits from the TPP.
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The writer is a researcher at the Centre for Strategic and International Studies in Jakarta.
- See more at: Trans-Pacific Partnership: Indonesia’s lost opportunity? | The Jakarta Post
Indonesia could join Trans Pacific Partnership within two years
The Jakarta Post/Asia News NetworkMonday, Oct 12, 2015
Reuters
Indonesia could join the US-led Trans-Pacific Partnership (TPP) within two years after it finishes all the preparations necessary to join the free trade pact, a minister has said.
Trade Minister Thomas Lembong said the government would provide incentives to local businesspeople before it signed the agreement.
The minister explained that incentives, such as discounted electricity rates and fuel prices for the industrial sector, had been included in the government's third economic stimulus package released on Wednesday.
With the incentives, he said, businesspeople will hopefully keep their production bases in the country, instead of relocating to other countries.
"If the government can provide certainty [over discounted electricity rates and fuel prices and set definite minimum wages], we will join the TPP and also sign an FTA [free trade agreement] with the European Union so that businesspeople will keep their investments in Indonesia," he said as quoted by kontan.co.
Thomas said Indonesia's ability to join all of the free trade agreements would depend on the seriousness of ministries that dealt with technical matters, such as the Industry Ministry, the Agriculture Ministry, the Communications and Information Ministry, the Manpower Ministry and the Health Ministry.
Solid co-operation and support from all stakeholders, including the ministries, society and businesspeople, would be needed to make Indonesian memberships in the TPP and the UE's FTA possible, he said further.
"Therefore, my colleagues at the Trade Ministry and I will work hard to co-operate with other ministries to find solutions to overcome all obstacles at the technical level," Thomas said.
The Trade Ministry's director general for foreign trade, Bachrul Chairi, says Indonesia has yet to see the urgency in joining the US-led Trans-Pacific Partnership (TPP).
He said the government was currently focusing on the free-trade agreement at the ASEAN level.
ASEAN members are consolidating to ratify the Regional Comprehensive Economic Partnership (RCEP), which is expected to have economic potential as vast as that of the TPP.
Out of the 16 countries joining the RCEP, 10 countries are ASEAN members, with the remaining six being ASEAN trading partners and, involving 3.4 billion people - or 48 per cent of the world population and a US$21.7 trillion (S$30.4 trillion) gross domestic product (GDP), equaling 29 per cent of global GDP.
On the other hand, the TPP agreement involves 12 countries - reflecting a total population of 808.7 million people or 11 per cent of the world population. The GDP of those countries reaches US$27.8 trillion or 37 per cent of global GDP.
Indonesia Footwear Association (Aprisindo) chairman Eddy Widjanarko stated that Indonesia would be left behind if it did not join the TPP within the next two years. "The footwear manufacturing sector is very ready for the TPP."
- See more at:
Indonesia could join Trans Pacific Partnership within two years, News, News, AsiaOne Business News
IMO Indonesia will only joined TPP if it enhances her national interest but right now, it does not serve Indonesia.
