Cooperation agreement between ASEAN and China (ACFTA) is an opportunity for Indonesia. With ACFTA, Indonesia will gain a larger market share. This was delivered by Dedy Permadi, MA, a researcher from Center of World Trade Studies UGM in the discussion ACFTA: Opportunity or Challenge? on Friday (15/4) in the Center’s office.
According to Dedy, the ACFTA will open market access for Indonesia widely. Indonesia would gain the market share of nearly 6 times more than the domestic market. As it is known, population of China at this time exceeds 1.3 billion people.
"The big population certainly opens a great opportunity for Indonesian producers to supply their products to China. It needs to note that Indonesia has many excellent products that are not owned by many other countries such as oil palm, cocoa, soybeans, tea, fruit, beef, and chicken," he explained.
With ACFTA, Dedy said, Indonesia also has the opportunity to gain investment from China whose Gross Domestic Product (GDP) currently is ranked second in the world and has foreign exchange reserve up to US$ 2.4 trillion, the largest in the world. "The greater the GDP and foreign exchange reserves, the greater the value of investments from that country," he explained.
In 2010, China only invested U.S. $ 173 million, the 11th largest investor in Indonesia. In fact Overseas Direct Investment (ODI) of China 2005-2009 period reached U.S. $ 175 billion. "This means the flow of Chinese investment in Indonesia is still very small and we should be much easier to capture the capital of China with the presence of ACFTA," Dedy explained.
Furthermore, Dedy delivered, the free trade agreements based on the region could be a stepping stone for developing countries, including Indonesia. Through ACFTA, Indonesia can learn in advance to get used to compete with neighboring countries, before tougher competition at the global level at a later stage. "Indonesian products are not yet competitive on global level, for example textile, this can be practiced first in the framework of ACFTA, regionally. So, although we are now stumbling in facing competition in ACFTA, it would be beneficial to train us to face more severe competition in the international market," he said.