kriste5

Hi. maybe someone has experience with imports from China to Indonesia?I heard that it is almost not possible, because Indonesia puts 100% taxes?thanks in advance.

Kriste

Simon

Rules, indeed. That is very much to the nub of the issue.

If Indonesia walks away from this, or tries to re-negotiate, it may well shut up shop and walk away. It's credibility as a trading nation is shot.

Rules

Salimharko et al.

In my view, the crux of the problem is not how China's economy compares to ours at the moment, or how bad this would be to local industry.

The crux of the problem is that the government signed this in good faith with the PRC in 2002 - that's eight years ago. We have had eight years to prepare for this and now, eight years later, we wish to renege our end of the bargain at the last moment.

What have we been doing for eight years? Why haven't we taken enough steps from 2002-2010 to ensure that when the time comes we can step up to the plate and say, "Ok, we're ready to do what we promised to do eight years ago."

Our credibility will be destroyed because of this, and this is not China's fault. China does not make our economic policies. Why do we back out of a deal we signed at the last moment? We could've said no, we're not gonna sign this, eight years ago.

Simon

"All one has to do is read the current news and events about trade and commerce in various media like BusinessWeek, Time, Bloomberg and so on to know what is going on."

Ahh, the very same publications that were touting the collapse of China in late 2008. If I was relying on those rags, I'd not be (very successfully) in business across the region for many years.

Salimharko, in the politest possible way can I suggest that a career as an Asian economic commentator for Fox might be an option.

Indonesia will live or die on the quality of what it produces. Right now, it will die on that. The items you list below are all done better by China. Much, much better.

Two years aback I placed a large order for some machined goods in Indonesia. They were delivered late, faulty, and the price changed despite a contract, which had no force of law at the end of the day. When I paid the Indonesian owner took the money and bought a new Mercedes. His factory is desperately in need of new equipment, but it was not to be.

Compare with China where goods are almost always on time, to a specified quality standard and the money is reinvested. That's the huge difference. I've learned my lesson and I will buy Chinese now.

But, hell, I wish they'd explain to me how to turn the massive losses implied by the various right wing dumping conspiracies into such vast profits, because I am a businessman and am very anxious to know exactly how they did it.

Salimharko

Interesting articles to read: How China Cooks Its Books. - It's an open secret that China has doctored its economic and financial statistics since the time of Mao. But could it all go south now?: Foreign Policy.

China's Economy: Behind All the Hype - Despite an impressive rebound, an innovation shortfall may hobble sustainable growth: Business Week/Bloomberg.

( Google search the titles ).

Salimharko

Simon. We can ask a simple question. Why is China, supposedly the world's second largest economy, adamantly refuses to float its currency and allow itself to set its own value ?. The answer will give a clue. Even smaller economies like Australia, Canada, UK, NZ have floated their currencies. The China currency is closely protected and through that mechanism the entire economy in China is protected. Now that western markets are importing less, China will dump its excess inventory into countries like Indonesia and kill the industries here, such as textiles, shoes, packaging, consumer products etc. Once these industries here have gone bust, then the same products from China will start arriving here, but at higher prices. By then it is too late. The local industries will have vanished except those companies that export raw commodities and minerals to China. I am not a businessman nor do I have any vested interest in this FTA. All one has to do is read the current news and events about trade and commerce in various media like BusinessWeek, Time, Bloomberg and so on to know what is going on.

Salimharko

We can ask a simple question. Why is China, supposedly the world's second largest economy, adamantly refuses to float its currency and allow itself to set its own value ?. The answer will give a clue. Even smaller economies like Australia, Canada, UK, NZ have floated their currencies. The China currency is closely protected and through that mechanism the entire economy in China is protected. Now that western markets are importing less, China will dump its excess inventory into countries like Indonesia and kill the industries here, such as textiles, shoes, packaging, consumer products etc. Once these industries here have gone bust, then the same products from China will start arriving here, but at higher prices. By then it is too late. The local industries will have vanished except those companies that export raw commodities and minerals to China. I am not a businessman nor do I have any vested interest in this FTA. All one has to do is read the current news and events about trade and commerce in various media like BusinessWeek, Time, Bloomberg and so on to know what is going on.

Valkyrie

Guys! One swallow does not make a summer. China is huge (in all aspects) and no one can really tell right now what is actually going on.

The international political playing field, at the moment, I can see is in the doldrums. Inevitably, these elephants when they make love or war will kill the grass.

Simon, may I ask you how many cities in China do you have vested interest in? I am assuming your time spent there was not for pleasure.

Salimharko - are you hinting that the bubble will finally burst?

Now we have the FTA issue at hand and I have a strong feeling that a lot of people will be hurt. The next six months will tell.

Nathan.W

Very good point Jeanne, decentralization of government power after Suharto regime was not followed by proper reorganization and Strong Leadership. Our government has become too slow and too bureaucratic to get anything done. There is a Disconnect between the Government and the Reality, now that they finally realized what is going on; they’re trying to put the brakes on FTA when it’s already too late.

We desperately need strong Leadership, Leaders who are quick enough to response to Public concerns and bold enough to use public support in overcoming bureaucratic and political obstacles.

Simon

Salimharko,

I spend a good deal of time in China and what you've written is simply untrue.

Many factories have closed but many of these have been replaced by bigger and better factories. Chinese industry is booming and has, as a generalisation, done fairly well over the past year or so. It didn't take the hit the west thought it would through careful planning and loosening up of the domestic economy (making land transferable for example).

As for your claims on the US dollar. Well, yes it's still hugely important but the days when the non-producing USA controlled it have gone. The future of the USD is very much in the hands of the Chinese, who are buffered by a massive and growing domestic economy.

And I'd argue, given history, that your new regulations will prevent absolutely nothing in the US which has suffered these sorts of greed driven busts repeatedly since it's inception as a state. What's changed now is that the US economy is no longer able to endure these and absorb them, since it's essentially a consuming economy rather than a producer.

In 2009 70% of the world's r&d was done in China. 75% of it's energy r&d.

Re: Indonesia

Indonesia's issue is one of quality. It simply doesn't produce the quality of goods to compete with China. Machinery is old, there is no QC, there is no reinvestment in infrastructure, the roading and ports are collapsing and corrupt practices add huge amounts to doing business here. Indonesian companies regularly ship either a substandard product or cut corners to make a few extra bucks: an

example- furniture shipped from Indonesia collapsed when arrived in Australia. The glue used on the satisfactory sample was not used on the manufactured goods. The QC company hired took a bribe from the local company to provide a certificate.

These are the reasons Indonesia can't compete.

Jeanne Hachette

Nathan, I agree with you on some of your points but for the infrastructure projects, it doesn't take a decade or plus in China to do a East Jakarta flood canal or a MRT system.

To summarize , China says : just do it and Indonesia says NATO (no action , talk only).

Indonesia must copy the good aspects of China and reject the bad ones, then this country will gain the place it deserve in the world economy.

Salimharko

China's economic importance has been over hyped and greatly exagerated. It is now very clear that the excess credit money in the US, the past few years, has been the main reason for China's booming exports. Now that the money has dried up and new regulations will prevent such a recurrence in USA, China's exports have taken a big hit. In fact China's growth for 2009 is near zero, although official statistics paint another story. Tens of thousands of factories have closed down and warehouses all over the country are filled with unsold production caused by reckless bank loans given to keep factories running. Soon, the entire region will be flooded with these excess production goods at cheap prices, resulting in anti-dumping measures and levies being put in place by other countries.l It is already happening. The notion that China will pull up the global economy is simply not true. Without the USA and the West, China has no place to export and its economy will suffer as is happening now. The USA is still the greatest economic power by a million miles ahead of China. The US dollar is still the main reserve currency used in 98% of global trade.

Nathan.W

FTA with China is bad for Indonesia, simply because Mainland products are heavily subsidized by the Communist Party; from currency manipulation to excessive building of infrastructures and over production of goods where cost cannot be justified. China’s development model is not sustainable and poisonous to their long term prosperity, and our government is letting us share that poison.

Mahmud G

Ehm..didn't anyone in the government predicted what the deal would do to local industries? Why ask for renegotiation just a few days after the agreement (that I presume was cooked up for several months/years) has come into effect?

This sounds saddening. I see, as a layperson, this is not an honourable thing to do with an agreement, though still acceptable.