CROUCHING "THE HIDDEN DRAGON"

ASEAN-China Free Trade Area (ACFTA) is the new era for ASEAN-China relations in trade and economy. ACFTA is the continuance of ASEAN Free Trade Area (AFTA) which has signed in 1992. In the beginning, ACFTA was made for improving the relations between ASEAN and China in trade and economy. But as the time goes by, ACFTA becoming a ‘ghost’ for ASEAN country. The relations becoming unequal now and ASEAN country have to set the strategy to strengthening it’s trade and economy for kicking “The Hidden Dragon”.

ACFTA effectively applied in 1 January 2010. The aim of this assignment in the beginning is :

1.        Strengthening and improving the relations between ASEAN and China in trade, economy, and investment.

2.        Liberating and improving capital trade and service trade, and also creating a transparent system for facilitating the investment mechanism.

3.        Exploring the new model of cooperation and fostering the right policies for keeping the economic relations between ASEAN and China.

4.        Facilitating the effective economic integration between the new ASEAN member (Kamboja, Laos, Myanmar, Vietnam / CLMV) and bridging the economic development gap between it’s members.

But, the implementation of ACFTA’s aim above is not as smooth as the imagination of ASEAN country. Moreover, ACFTA is now becoming a ‘ghost’ for ASEAN country, including Indonesia. ACFTA will be stopped if the implementation of ACFTA endangered ASEAN economy in general, and Indonesian economy in particular. ACFTA may give China more chance to spread the domination in ASEAN countries. In Indonesia, after ACFTA effectively applied, national industries being ‘hit’ by Chinese product. We can find Chinese product easily in some traditional market or in every supermarket. The supply of Chinese product is much more than national product because of their price which cheaper than ours. The quality of Chinese product is also quite good enough. This is the reasons why Indonesian people in common prefer to choose Chinese product than our national product. This domination of China becoming a ‘ghost’ for ASEAN country and Indonesia of course.

The domination of Chinese product in Indonesia especially is affected by China’s economic policy. The price of Chinese product in Indonesia is cheaper than it’s price in China’s domestic market. This strategy is called dumping policy. On economy, dumping is traditionally defined as selling at a lower price in one national market than in another. Dumping is officially banned in international trade. Beside the dumping policy, there is some controversial of Chine’s economic and industry policy. For example, the exploitation of national worker, and restriction the rights of making a union. China’s authoritarian regime can do anything to force the increasing of China’s quantities production, even do the violance. China’s mass production becoming a threat for another country, especially ASEAN and Indonesia.

Indonesian government realize that China’s dumping policy has a negative effect for Indonesia. This is quite unfair for Indonesia, because China dominate our national market by the illegal way (doing the dumping policy). Indonesia have to set the strategy for keeping the relations to China in trade and economy. Indonesia will take three steps for crouching “The Hidden Dragon” as known as China on ACFTA. This strategy is for ensuring that ACFTA will bring a good impact for our national economy. The strategy is :

1.        ACFTA must give a priority to the balance trade principal. If the unequal condition happened, there will be a renegotiation.

2.        Preventing excession in our national industries that affected by ACFTA.

3.        Improving the capacity building of our national industry.

China-Indonesia economic and trade relations becoming unequal, especially in frame of ACFTA. As the agreement reached, there will be a renegotiation if the condition becoming unequal. One of the member that lossed by the agreement can make a protest. This is the aim of Indonesia for preventing Indonesia from suffer. And then, Indonesia have to strengthen our national capacity building for improving the quality and the quantity of our national product. Next is renegotiation step. Renegotiation is quite difficult to reach the agreement, but there is a possible chance to do it. We can do it if China break the balancing trade principal. That’s one of the target for crouching “The Hidden Dragon”. China may becoming so accomodative because of that. There is some crucial point that Indonesian government have to pay attention : China-Indonesia quantities of export and import, stardard of the product, the price market with no dumping, and Indonesian product labeling. And then, our taxes policy have to optimalized, so we can improve our competitiveness and reducing China’s domination in our national trade and economy. And of course the government have to develop a good infrastructure for supporting the effectivity of our national industry.