| via locadev |
I owe this article to a friend in Bandung since my last visit there, last month. Due to my busy-ness, I just have time to write it now (sorry). So, during my visit to Bandung I met two of my old friends, whom both have small business; one in fabric business and the other has custom shoes workshop. Both, to my surprise, complained about the same thing: the upcoming AFTA 2015, which made me wonder, what about it?
What is AFTA?
Based on Wikipedia:The ASEAN Free Trade Area (AFTA)[1] is a trade bloc agreement by the Association of Southeast Asian Nations supporting local manufacturing in all ASEAN countries.
The AFTA agreement was signed on 28 January 1992 in Singapore. When the AFTA agreement was originally signed, ASEAN had six members, namely, Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand. Vietnam joined in 1995, Laos and Myanmar in 1997 and Cambodia in 1999. AFTA now comprises the ten countries of ASEAN. All the four latecomers were required to sign the AFTA agreement in order to join ASEAN, but were given longer time frames in which to meet AFTA's tariff reduction obligations.
The primary goals of AFTA seek to:
The primary mechanism for achieving such goals is the Common Effective Preferential Tariff scheme, which established a phased schedule in 1992 with the goal to increase the region’s competitive advantage as a production base geared for the world market.
- Increase ASEAN's competitive edge as a production base in the world market through the elimination, within ASEAN, of tariffs and non-tariff barriers; and
- Attract more foreign direct investment to ASEAN.
After some discussions, both of my friends said that this AFTA thing is a seriously big threat for their business, especially at the beginning of the opening of the program, because the agreement will allow imported stuff spread widely in cheap(er) prices around Indonesia which was expensive due to the taxes it applied.
| via sastrasipilindonesia |
Why is it a threat?
Let's take it this way:- The imported brands that come to Indonesia is very pricey now that it has enough digits or percentages of taxes it applied with.
- This, has made the small local business alive because those who cannot afford buying expensive things will go for custom-made or the copy or anything made by local industries.
- But when AFTA is applied in Indonesia shortly next year, this will make the imported goods as cheap as, if not cheaper than, the local-made stuff.
- Seeing the character of Indonesian nowadays, most of us always prefer things that come from outside of our own country than local-made, mostly because of the brands.
- Then what will happen to the local small industries?
- How will they compete with imported brands with such competitive price?
- Moreover, how will they manage to export their stuff with the competition among international producers?
This AFTA agreement, of course, is a great opportunity for Indonesian industries to go international and export their stuff, introducing their brand globally, at least in ASEAN + 3 East Asia countries (China, Japan, South Korea). But how about the small industries that do not have enough fund to compete with the middle and big industries? Are we really ready for the agreement?
| via patra |
They call it win-win?
Yes, we can always see the bright side in every situation, especially for those who are big enough and ready for the change. But for the small industries, things can be even more rocky. The conditions to enlist a product/brand for AFTA will include a set of documents, registrations and payment of certain amount that is rather impossible for small industries to provide.Then, how about the workers of these small industries?
Will they be on risk of losing their jobs?
And what do the government do to help the small industries with it?
This, I suppose, should be our homework to think about the solutions for them. If we want the equity of economy throughout our country and to thrive together, we must do something about it.. but WHAT? HOW? Can we raise our awareness and love to local products? Can we provide or donate for small industries to help them survive the agreement?
What do you think?
*comments/replies for this post will be posted in my next blogposts. Just keep 'em coming and if you're on my range (Indonesia area), I might give you something as a reward.. Let's do something about it!







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