Indonesia's Automotive Industry Ready for Trans-Pacific Partnership?
Last year Indonesian President Joko Widodo emphasized the importance for Indonesia to join the Trans-Pacific Partnership (TPP) as this free trade deal - one of the world's most ambitious trade deals, covering an area that contributes about 40 percent to total global trade - will make the Indonesian economy more efficient and its exports more competitive (while also expanding the nation's export base). However, there also exist concerns about a possible participation of Indonesia in this free trade deal. One of the concerns involves Indonesia's automotive industry.
The Trans-Pacific Partnership (TPP), which was spearheaded by the United States, is designed to increase trade flows among the 12 member nations (USA, Japan, Malaysia, Vietnam, Brunei, Chile, New Zealand, Singapore, Australia, Canada, Mexico, and Peru) by reducing tariffs and barriers for a wide variety of products. By liberalizing trade to a high degree the TPP aims to boost economic growth among the member nations, support job creation, innovation, productivity and competitiveness, curtail poverty, promote transparency as well as good governance, and enhance both labor and environmental protection. It is often mentioned by analysts that the establishment of the TPP is also motivated by the desire to reduce the large influence of China in East Asia.
On Wednesday (01/06) a group discussion was held in Jakarta called "the Trans-Pacific Partnership: an Opportunity or a Threat?" This event was organized by the Journalists Forum Industry (Forwin) and was joined by various stakeholders, analysts, and government officials.
Indonesia's Automotive Industry & the Trans-Pacific Partnership: Friends or Enemies?
If Indonesia decides to join the Trans-Pacific Partnership then it could cause a surge in imports of completely built up (CBU) car units into Indonesia, while Indonesia's car exports to the 12 TPP member nations are expected to remain low due to the weaker competitiveness of Indonesia's automotive industry. For example, Japan - a leading global force in the automotive industry - is expected to raise its shipments to Indonesia. Although the Japanese car manufacturers already have their production facilities in Indonesia, it becomes attractive to simply export CBU units to Southeast Asia's largest economy where per capita car ownership is still low. A stakeholder said it could in fact jeopardize the development of Indonesia's recently introduced (in late-2013) low cost green car industry.
Enny Sri Hartati, economist at the Institute for Development of Economics and Finance (Indef), does not agree, arguing that Indonesia's automotive industry has little to do with the TPP because nearly all of Indonesia's car output is sold on the domestic market (of the 1.2 million cars produced in Indonesia in 2015, only 200,000 units were exported abroad). Hartati seems pessimistic about the fruits if Indonesia joins the TPP. "As long as Indonesia keeps relying on commodity exports, the nation will not benefit optimally from the TPP."
Read more: Overview and Analysis of Indonesia's Automotive Industry
Yanuarto Widihandono, Secretary General at thhe Indonesia Automotive Institute (IAI), believes Indonesia's competitiveness in the automotive industry is weaker than in Japan or Mexico. Therefore, Widihandono expects that Indonesia, Canada, the USA, and Australia will start to import more and more cars as a result of the TPP. Meanwhile, Indonesia will be unable to boost its own car exports because Indonesia's automotive industry is still at the Euro 2 level, while other nations are already at Euro 5 or Euro 6 (Euro is a standard that reduces the limit for carbon monoxide emissions). In other words, Indonesia needs to develop its automotive industry first before it can compete on the international level.
Indonesian Car Sales (CBU):
| Month | Sold Cars 2012 |
Sold Cars 2013 |
Sold Cars 2014 |
Sold Cars 2015 |
Sold Cars 2016 |
| January | 76,427 | 96,718 | 103,609 | 94,194 | 85,012 |
| February | 86,486 | 103,278 | 111,824 | 88,740 | 88,225 |
| March | 87,917 | 95,996 | 113,067 | 99,410 | 93,990 |
| April | 87,144 | 102,257 | 106,124 | 81,600 | 84,703 |
| May | 95,541 | 99,697 | 96,872 | 79,375 | |
| June | 101,746 | 104,268 | 110,614 | 82,172 | |
| July | 102,511 | 112,178 | 91,334 | 55,615 | |
| August | 76,445 | 77,964 | 96,652 | 90,537 | |
| September | 102,100 | 115,974 | 102,572 | 93,038 | |
| October | 106,754 | 112,039 | 105,222 | 88,408 | |
| November | 103,703 | 111,841 | 91,327 | 86,938 | |
| December | 89,456 | 97,706 | 78,802 | 73,264 | |
| Total | 1,116,230 |
1,229,916 |
1,208,019 | 1,013,291 |
| 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | |
| Car Sales (car units) |
607,805 | 486,061 | 764,710 | 894,164 | 1,116,230 |
1,229,916 | 1,208,019 | 1,013,291 |
| Car Exports (car units) |
100,982 | 56,669 | 85,769 | 107,932 | 173,368 | 170,907 | 202,273 | 207,691 |
Source: Gaikindo
In line with President Widodo, I Gusti Putu Suryawirawan, Director General of Metal, Machinery, Transportation Equipment and Electronic Industries at Indonesia's Industry Ministry, is supportive of Indonesia's membership in the TPP. Suryawirawan says the partnership opens opportunities, in particular by widening Indonesia's export markets. Moreover, Thailand - the leading car producer in Southeast Asia - may also join the TPP. If Thailand joins, while Indonesia refuses, then Indonesia will most likely not achieve its long-term target of overtaking Thailand as the regional car manufacturing hub.
Read more: Indonesia & Free Trade Agreements: Indonesia-EU CEPA, TPP & EFTA
On the other hand, there are several business sectors in Indonesia that are expected to benefit from the TPP because their main export destinations already comprise existing members of the TPP. For example, textile and textile products, footwear, food and beverages, and wood sectors. Both the USA and Japan are big importers of most of the related products. Due to lower tariffs demand is expected to grow in these export markets. However, if Indonesia does not join the TPP then a country such as Vietnam could become a more attractive trading partner for the USA and Japan.
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‘Harmless’ Citizens of Indonesia; Please DON’T make the same Mistake as Canadians Re; Corporate ‘America’.
TPP & other Global Corporate Treaties/’Arrangements’; So what if the 6 years of negotiations was secret,
‘…YOU SHOULD HAVE KNOWN’.
- U.S. president George H.W. Bush regarding the U.S. ‘reneging’ on the FTA Foray with Canada.
Living with Litigious & Anti-Tort Corporate ‘America’;
So, You’ve Never Been Secretly Sued Before Off the Top of National Budgets to Increase value of corporate shares & dividends…
TPP, et al, base for future changes for what Global Corporate Economy; your tax dollars to fund their enterprises & value of shares with No Corporate Liabilities & Corporate future considerations…
...One of the things that the 95% - 99% of Canadians who make up the grassroots of Canada & who cannot afford to be shareholders of corporate Canada in the Trans Pacific Partnership (TPP), etc., & the other non-shareholding citizens of the potential signatories of the TPP, such as Australia, might consider remembering is a remark by former U.S. president George H.W. Bush regarding the arrangements between corporate America & corporate Canada in the NAFTAgreement,
&
that is:
"Well, you should have known".
Did he mean that the Canadian politicians, &/or, the members of corporate Canada that Bush was dealing with should have asked him (Bush) if all of the relevant contingencies had been discussed, understood & agreed upon, including dispute mechanisms & escrow accounts, funded by corporate Canada & corporate America, set up to cover the costs of adjudicating any dispute resolutions and
to pay for any punitive penalties, &/or, damages prior to finalizing any deals, arrangements, treaties, agreements, et al.
Or, did President Bush mean that the aforementioned Canadians representatives did do their due diligence & it was the Canadian representatives who should
have told the aforementioned 95% - 99% of the grassroots Canadians that the above due diligence procedures were in place, but, the grassroots Canadians have to pay the costs of procedures & penalties because they, the grassroots
Canadians, had not thought to inquire that the procedures were in fact "in-place", & thereby, ensure that the aforementioned procedures, etc. would ensure that the either, corporate Canada, or, corporate America would pay for both; the penalties & the procedures.
Or, should the grassroots of Canada have known that corporate America had no intention of honoring parts of the treaty right from the start, but the US- Canada
Agreement (NAFTA) was quickly ratified with suggestions that any deficiencies, or,
“forget-me-nots”, etc. to the agreement would be amicably settled on an on-going basis?
Therefore, when it comes to any present arrangement, treaty, &/or, agreement that may have anything to do with corporate American, such as; the TPPartnership, law enforcement, etc., we now know better, but, now, do not ask, or,
insist that the enforceable procedures, penalties, escrow funding from corporates Canada & corporate America, et al, be agreed upon by the grassroots Canada in a series of plebiscites prior to proceeding any further?
And, if corporate Canada fails to provide the plebiscites, et al, when will the grassroots be enabled to sue both of the corporate Canada's escrow accounts which corporate Canada will have to set aside the funds for the grassroots
legal funds as a prerequisite (ie. to investigate & prosecute...
(Edited) Or, did President Bush mean that the U.S. would make sure that corporate Canada would get its "future considerations" for the U.S.'s reneging on the soft lumber dispute mechanisms of NAFTA by enabling Canada to recoup its losses at Japan's expense via the TPP?
What the TREATY of VERSAILLES was to the 20th century PALES in COMPARISON to the TPP, CETA, C-CIT, NAFTA, et al, in the 21st.
***
...For the FULL ARTICLE,
see; davidehsmith.wordpress.com
***
To SHARE Information & Questions re; The Relationship between Human (Nature) Rights & Economics in 1) Native Canadian Treaties and 2) the C-CI Treaty,
the CET Agreement, the TPPartnership, et al, via The WAD Accord
and
the List of RECENT ARTICLES, LETTERS & NOTIFICATIONS by DEHS,
see; davidehsmith.wordpress.com
***
Also See;
SECRET TPPartnership, CETA & C-CIT TRIBUNALS are INSIDER TRADING; corp. Canada fears China may Blow "Arrangements" between Can. Lobbyists' Clients & Parties' Executives (W.A.D. Accord*)? NON Shareholders HAVE TO PAY the arranged PENALTIES. Repatriating off-shore; profits, goods & services contracts, financing, etc. and co-manufacturing still not on the table? LINE UP to "PRE" IPOs SHOrtens.
***
Please consider sharing the enclosed information & questions with 10 friends who will share it with 10 others & so on...
***
Also see;
Global Treaties Not about How Much Trade, but, How to & Who to Trade with to 'Undermine' AIIB.
Will China, Iran, the Muslim World, et al, Support Putin’s Anti-TPP Funding of Anti-TPP Investment Litigation?
When people in Indonesia can not order anything from another nation on the Internet without getting an import permit (which requires a PT or corporation), how is it possible for Indonesia to join the TTP? Why should a foreign business be interested in Internet sales in Indonesia? Indonesia is very far from being able to have free trade with any country.
It is better that the Indonesian Government has to change the Automotive policy in the Country to compete with World Market. The Automotive Sales are surging year by year in Indonesia after 2014.
This is mainly due to the Policy decisions. The Car and Bike prices in Indonesian is much higher than other ASEAN Countries despite the Country has a badge as 3rd Largest Population.
The Country has all kind of resources and Manufacturing capability to Produce any kind of Cars with World class standards. In Indonesia the Government has to change immediately the norms of Localisation contents which is at 60 % now to 95%. This will force all companies to go with Local Manufacturing of Automotive Parts and also will boost the Employment opportunities in the country.
Today in Indonesia though there are almost all the world Automotive companies are operating, only 2% of them are sourcing components locally, and even in that they import nearly 40% of the components from the parent countries.
Once the Government make rule as 95 % local contents as mandatory which will also reduce the selling price of the vehicles and leads more purchase power for the common peoples.
Also the Government has to remove the cap of Luxury Tax which is a high contributor for the overall price of the vehicles.
The Government can make the change as for 95% Local content vehicles the Luxury tax can be reduce to 15% and less than 95 % a slab rate of tax can be fixed.
It is high time that the Indonesian President and the Ministry has to look into this matter very seriously.