Feb 2, 2013

Indonesia - New govt system to oil the wheels of trade in ASEAN

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The government will soon introduce a system that will simplify the procedure for exporters to obtain a Certificate of Origin (C/O) for their products.

This will make it easier for business players to enjoy zero trade tariffs under the ASEAN Free Trade Agreement (AFTA).

The new system, which is still a pilot project, will grant some certified exporters the authority to issue invoice declarations for products to be traded within ASEAN.

Currently, the issuance of a C/O is under the authority of the Trade Ministry, which also sometimes involves officials at the regional administration, causing a long chain of bureaucracy. “Through this project, we aim to further facilitate trade within ASEAN and also increase the utilization rate of the [AFTA] preference,” the ministry’s newly-appointed director for ASEAN cooperation, Djatmiko Bris Witjaksono, told The Jakarta Post in Jakarta on Thursday.

As agreed during the ASEAN Summit in Cambodia last year, Indonesia will carry out the pilot project aimed at enabling business players, especially small and medium enterprises, to reap greater benefits under the AFTA, particularly the ASEAN Trade in Goods Agreement (Atiga), along with the Philippines and Laos.

Under a different arrangement, a similar project was earlier conducted by Brunei Darussalam, Malaysia, Singapore and Thailand in 2011.

Despite the low tariff, or zero percent tariff for trade between ASEAN members made available through the C/Os, only a few business players utilized the facility.

Out of Indonesia’s total exports to ASEAN members in 2011 of around US$40 billion, only 30 percent were covered by the facility, according to Trade Ministry statistics.

The figure was higher compared to the average utilization by other ASEAN members, which stood at 15.8 percent out of overall exports to Indonesia during a similar period.

The self-certification project would be part of the key measures that Indonesia took to anticipate the formation of the ASEAN Economic Community (by 2015), Djatmiko said.

Apart from this project, the government would also improve the country’s national single-window system to smooth the flows of trade within the Southeast Asia region.

The system would prompt cross-border traders to submit regulatory documents at a single location.

Indonesia plans to ratify several agreements, such as the trade in goods in transit and the ninth package of the ASEAN Framework Agreement on Services (AFAS).

A joint assessment of the score cards reviewing the progress of each ASEAN member toward the formation of the region’s single economic community shows that Indonesia achieved a total score of 82 percent last year, still below neighboring countries Malaysia and Thailand.

As envisioned by the AEC 2015 Blueprint, the community will be supported by four pillars: a single market and production base, a highly competitive economic region, a region with equitable economic development and a region fully integrated into the global economy.

The establishment of the community will continue earlier efforts made through the ASEAN Free Trade Area (AFTA) started in 1992.

Through the free trade pact, 99.11 percent of tariffs in the ASEAN-6 (Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand) have already been scrapped since 2010, while 98.86 percent
of tariffs of the ASEAN-4 (Cambodia, Laos, Myanmar and Vietnam) have been reduced to between 0 and 5 percent.

Linda Yulisman

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