Business actors noted that the tariff exemption from Indonesia's trade agreements has so far been used more by Indonesia for imports than exports. This is inseparable from the structure of Indonesia's imports which are dominated by raw/auxiliary materials to support production activities. "Our evaluation in the last few years is that our FTAs are mostly used for imports, not exports. This is because on the import side we have a lot of productive imports for production purposes," said Coordinator of Deputy General Chair III of the Indonesian Chamber of Commerce and Industry for Maritime Investment and Foreign Affairs, Shinta W. . Kamdani, Sunday (13/2/2022).
On the other hand, Shinta said that not many Indonesian exports were included in the global value chain (GVC). This situation makes efforts to encourage exports constrained by the burden of meeting criteria in the destination country (compliance), regardless of the tariff exemption applied.
"Exports for GVC are usually assisted by global buyers for the needs of smooth supply and export compliance," he said.
Therefore, Shinta continued, if Indonesia is not aggressive in encouraging exports, especially in meeting the criteria in the destination country, trade agreements will not be optimal in boosting export performance. As a result, the trade agreement actually widens the deficit with partners.
"Therefore, we continue to urge the government to be more aggressive and more consistent in helping national businesses improve export performance," added Shinta.
The trade balance with a number of trading partners who have entered into trade agreements with Indonesia recorded a widening deficit. Among them is the deficit with Australia which will increase from -US$2.14 billion in 2020 to -US$6.20 billion in 2021, in line with the implementation of the Indonesia-Australia CEPA.
There was also an increase in Indonesia's deficit with Singapore and Thailand, from -US$1.68 billion to -US$3.81 billion and from -US$1.73 billion to -US$2.06 billion, respectively.
Chairman of the Indonesian Textile Entrepreneurs Association (API) Jemmy Kartiwa said textile and textile product exports (TPT) had enjoyed tariff exemptions to all Asean countries and to China. For other markets such as Europe and the United States, TPT goods still face import duties.
"However, whether it will automatically have an impact on exports cannot be concluded immediately, further data studies are needed," said Jemmy.
Separately, Secretary General of the Association of Electronics Entrepreneurs (Gabel) Daniel Suhardiman noted that almost all electronic goods including finished products, components, and raw materials traded with 10 major trading partners have been free from the imposition of tariffs.
"With fellow Asean countries there is AFTA and with China there is Asean-China FTA," he said.
Exports of the electronics industry were recorded at US$ 11.77 billion or equivalent to Rp. 168.74 trillion throughout 2021.
However, this value is still much lower than electronics exports in other Asean countries such as Malaysia which reached 37 percent of total exports of US$293.7 billion or Vietnam, whose electronics exports reached 39 percent of total exports of US$364 billion throughout 2021.
