Obstacles to an Indonesia-Taiwan economic partnership
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| Taipei's skyline at night .[Credit: Flickr Ryklin] |
More often than not, whenever a Taiwanese official pays a visit to Jakarta, there is usually one question on his mind: “Dude…where’s my FTA?”
Though the question is usually couched in a more diplomatic and subtle language, the essence remains the same: with all the potential economic benefits an Indonesia-Taiwan FTA could bring to the table, why has one not been forthcoming? If Singapore can sign an FTA with Taiwan, what’s stopping Indonesia? Indeed a joint study by an Indonesian and Taiwanese think tank found that if tariff barriers between the two countries were removed, trade would increase by as much as USD 334 million; a largely conservative figure given non-tariff barriers are not taken into account.
A suggestion made when a Taiwanese delegation from Prospect Foundation recently paid a visit to The Habibie Center may shed some clues to the questions above. Though the aforementioned joint study may have looked at hard economic data, focusing on facts and figures, it had perhaps omitted an examination of public perceptions among the average Indonesians or the political climate in Jakarta. The discussion at The Habibie Center revealed these two factors to be the biggest present obstacles to an Indonesia-Taiwan FTA; thus attributing little to any notion that maintaining Jakarta-Beijing relations stood in the way.
In developing this point, three things can be said. Firstly, in the past few years the Indonesian public have grown tired of the many economic partnerships Jakarta has entered with very little benefits seen as a result. Indeed a popular feeling among Indonesians is that the costs of various FTAs far outweigh their benefits.
Secondly, on some level the Indonesian Government has failed to communicate effectively with the people to explain the advantages. A case in point was the Government’s handling of the ASEAN-China Free Trade Agreement of 2002 (ACFTA). Though the Government had eight years to socialize the Agreement to the people, ACFTA instead drew widespread public opposition at the eleventh hour in 2010.
Though the question is usually couched in a more diplomatic and subtle language, the essence remains the same: with all the potential economic benefits an Indonesia-Taiwan FTA could bring to the table, why has one not been forthcoming? If Singapore can sign an FTA with Taiwan, what’s stopping Indonesia? Indeed a joint study by an Indonesian and Taiwanese think tank found that if tariff barriers between the two countries were removed, trade would increase by as much as USD 334 million; a largely conservative figure given non-tariff barriers are not taken into account.
A suggestion made when a Taiwanese delegation from Prospect Foundation recently paid a visit to The Habibie Center may shed some clues to the questions above. Though the aforementioned joint study may have looked at hard economic data, focusing on facts and figures, it had perhaps omitted an examination of public perceptions among the average Indonesians or the political climate in Jakarta. The discussion at The Habibie Center revealed these two factors to be the biggest present obstacles to an Indonesia-Taiwan FTA; thus attributing little to any notion that maintaining Jakarta-Beijing relations stood in the way.
In developing this point, three things can be said. Firstly, in the past few years the Indonesian public have grown tired of the many economic partnerships Jakarta has entered with very little benefits seen as a result. Indeed a popular feeling among Indonesians is that the costs of various FTAs far outweigh their benefits.
Secondly, on some level the Indonesian Government has failed to communicate effectively with the people to explain the advantages. A case in point was the Government’s handling of the ASEAN-China Free Trade Agreement of 2002 (ACFTA). Though the Government had eight years to socialize the Agreement to the people, ACFTA instead drew widespread public opposition at the eleventh hour in 2010.
Thirdly, political parties have tapped into this depth of public feeling as a useful stick to beat the Government with. In other words, FTAs have been hijacked as a tool to win political points. To illustrate, although ACFTA was signed by Megawati Sukarnoputri during her Presidency, it was her Indonesian Democratic Party of Struggle (PDI-P) that would later become one of the most vocal critic of ACFTA against the Yudhoyono Administration.
Taking all the above into account, it is highly unlikely despite the economic sense it makes that Indonesia will commit itself to any new FTAs, any time soon. The public are tired, the Government needs to work on its communication skills, and political parties are sharpening their knives. As was mentioned at The Habibie Center, it was simply not a good time to sign an FTA, and with Presidential and Legislative elections around the corner in 2014, an Indonesia-Taiwan FTA is all the more unlikely.
So where does this leave our Taiwanese friends? A little patience, trust and understanding of the nuances shaping Indonesian politics and domestic environment would a go a long way. As such, greater Track 1.5 and Track 2 activities, like the third Taiwan-Indonesia Dialogue co-organized by The Habibie Center earlier this year, should be further encouraged. In this way can an Indonesia-Taiwan economic partnership be one day realized bringing economic prosperity to the peoples of Indonesia and Taiwan.
[This article was first published in The Jakarta Post on 19th December 2012 and can be found at: http://www.thejakartapost.com/news/2012/12/19/obstacles-indonesia-taiwan-economic-partnership.html]
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