Indonesia will not make the agreement just because others have done it.
Jakarta (ANTARA News) - Indonesia will not rush to sign a free trade agreement (FTA) with the European Union, Deputy Trade Minister Mahendra Siregar said here on Tuesday.

"Indonesia will not make the agreement just because others have done it. We must assess and evaluate the conditions first," he said at the ASEAN-EU Program for Regional Integration Support II.

EU has been holding negotiations with Singapore as of March 2010 and with Malaysia as of October 2010 to make an FTA and will also conduct negotiations with Brunei Darussalam, Vietnam, Thailand and the Philippines.

"We have not done such a negotiation yet," he said adding that Indonesia has a vision group that would analyze and evaluate future economic steps for Indonesia," he said.

"I will feel more comfortable if we have had preparations and new capabilities for making agreement but certainly economic meetings with the EU would continue to be done such as for example the ministerial-level ASEAN-EU Summit Meeting," he said.

Mahendra said since the financial crisis in Europe and North America in 2008-2009 there had been a shift in the global economic orientation to emerging markets such as China, India and Indonesia.

"Global industries can no longer force consumers in the region to consume the same products sold in the US or Europe. There must be adaptations with the market," he said.

In view of that, he said the ASEAN-EU FTA required adjustments and flexibilities because what was done right now was more of a form of temporary mechanism of interactions.

"The Asia-Europe Meeting right now is still a mere good concept and in practice it is still minimum and needs to be stepped up," he said.

The Asia-Europe Meeting is a forum of friends established in 1996 consisting of EU and ASEAN member countries, India, Mongolia and Pakistan.

Regarding the ASEAN Free Trade Area (AFTA) Mahendra said it would bring benefits to small and medium businesses referring to the Rule of Origin which shows that products are made in the members of the Association of Southeast Asian Nations.

Mahendra said 70 percent of Indonesian companies have met the agreement and half of them are small and medium businesses.

This means that small and medium businesses get a benefit from AFTA, he said.

Regarding the assessment of a researcher from the Economic Research Institute for ASEAN and East Asia (ERIA), Ponciano S. Intal that Indonesia is still below the Philippines, Thailand, Vietnam, Malaysia and Singapore, Mahendra said Indonesia is facing two problems.

"Indeed there are still challenges to be faced in Indonesia namely infrastructure and corporate governance. The rankings for India, Russia and China are actually not too well but investors keep coming there," he said.

He said it was not about how many FTAs to be made but how good they would be for integrating the existing agreements into ASEAN.

"Do not rush to make an FTA but evaluation must first be made on the existing agreements," he said.

Indonesia has so far made a free trade agreement with 10 countries in ASEAN and bilateral FTA with China, Australia and New Zealand.(*)

Editor: Heru Purwanto
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