SPOTLIGHT • INDONESIA SPOTLIGHT
“The industry of woven fabrics and knits is not faring well at all in Indonesia because of the flood of goods from China”
ALSO IN THIS SECTION
QUESTION & ANSWER, P44 Prikri Ilham K. of Garuda Indonesia airlines, on attracting the China business traveler
Splitting stitches
China’s textile industry is moving abroad, but politics prevent Indonesia from fully reaping the benefits
TRADE RELATIONS, 2010 Indonesian
exports to China: US$21.8 billion Indonesian
imports from China: US$22.0 billion China’s share of
total Indonesian trade: 13.16%
T
he free trade agreement between China and six members of the Association of Southeast Asian Nations (ASEAN),
which came into effect at the beginning of this year, was celebrated in some quarters and mourned in others. Lowering trade barri- ers may be good for the regional economy in general, but in Indonesian factory dormito- ries the greater good gives cold comfort. Te treaty eliminates tariffs on about 90% of im- ported goods between signatory countries; many Indonesians reasonably fear their coun- try’s textile, furniture and electronic industries will drown beneath a fresh tidal wave of cheap Chinese imports. Indonesian textile manufacturers in par- ticular were so concerned that they lobbied the
Indonesian Textile Association (API), which in turn begged the Indonesian government to delay implementation of the China-ASEAN Free Trade Agreement (CAFTA). Ade Sudrajat, then-deputy chairman of the
group, predicted that a trade war could break out between China and Indonesia if local tex- tile producers pushed Jakarta to impose anti- dumping duties on low-priced Chinese textiles, and Beijing retaliated with trade barriers on In- donesian shrimp. Te pact wasn’t delayed, a trade war didn’t
erupt and Indonesia saw an initial bump in rev- enues from increased exports in 2010. A year later, however, Indonesia is still worried about the impact CAFTA will have on its economy. While parts of the Indonesian textile indus-
China Economic Review • May 2011 39
Imaginechina
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