ASEAN-China Free Trade Agreement And Indonesia China Relation

The ASEAN-China Free Trade Area (ACFTA) formally took effect as of1stJanuary2010. The initial phase of the trade agreement was in force in early2004, alsoknown as the Early Harvest Program (EHP). A free trade area covering trade in goodsbetween China and the original six ASEAN members, including Indonesia and to befully implemented by2010and the remaining four years by2015. However, thesocialization of this agreement by Indonesian government is relatively poor and made itdifficult for business sector, especially for Small Medium Enterprises (SME) inIndonesia. For Indonesia, ACFTA has a positive effect because of the tradespecialization. Chinese clearly requires the supply of raw materials and auxiliarymaterials for industry, as well as market share and a quite promising partner. There is noother way that can be adopted to avoid “China’s commodity attack” unless Indonesia canincrease the competitiveness of their products. The transformation of geopolitics andgeo-economics from United States to China also play the main role for Indonesia’sdecision to sign this agreement. If the socialization is well implemented; Indonesiansociety will see this agreement as an opportunity not a threat and it will foster the goodbilateral relations of Indonesia and China.