13 - Perspective of the Indonesian Business Sector on the Regional Integration Process

Summary

In recent years, Indonesia has engaged itself in a number of free trade agreements (FTA) and other initiatives, such as the Indonesia-Japan Economic Partnership Agreement (IJEPA; 2008), ASEAN-China Free Trade Agreement (ACFTA; 2010), and ASEAN Economic Community (AEC; 2015). With regard to the AEC, ASEAN leaders agreed in January 2007 to move forward the establishment of the AEC from 2020 to 2015. One main objective of the AEC is to establish ASEAN as a single market and production base, which, according to the AEC Blueprint, shall comprise five core elements: free flow of goods, free flow of services, free flow of investment, freer flow capital, and free flow of skilled labour. The objectives of establishing the AEC are to make ASEAN a more dynamic and competitive region, with new mechanisms and measures to strengthen the implementation process of its existing economic initiatives; accelerate regional integration in the priority sectors; Indonesian Business Sector Perspective on the Regional Integration Process 197 facilitate movement of business persons, skilled labour and talents; and strengthen the institutional mechanism of ASEAN.

In the implementation process, an effective public-private sector engagement would be mutually reinforcing. Pushpanathan (2010c) asserted that ASEAN ministers agreed on the importance of engaging the private sector more intensively, not only during the implementation phase of economic integration initiatives, but also during the formulation exercise of ASEAN economic policies. However, there are many obstacles, including the lack of awareness particularly in the private sector in most of the ASEAN countries. Meanwhile, many multinational companies perceive the ASEAN market as “too fragmented” and not integrated.

The aim of this chapter is to assess the effectiveness of the ASEAN economic integration, based on the business sector's point of view and the prospects of the AEC to achieve its stated objectives by 2015. The study uses the survey or in-depth interview method with selected business communities and associations to gauge the level of their awareness concerning the AEC. While the questionnaire also asks respondents about other FTAs, the main focus of this study is about the AEC.