Factory workers of a leather footwear company in Bandung, West Java, on March 31, 2021. (Antara Photo/Novrian Arbi)

Indonesia Needs to Prepare for RCEP: Think-Tank

BY :JAYANTY NADA SHOFA

DECEMBER 31, 2021

Jakarta. In less than 24 hours, the Regional Comprehensive Economic Partnership —also known as the RCEP— will enter into force. 

Although Indonesia has yet to ratify RCEP, the archipelagic country needs to work on a number of things for it to become more ready for the trade pact, according to government policy think-tank National Resilience Institute (Lemhannas).

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“Indonesia needs to prepare itself to meet the demands of the regional partnership scheme. There is still a gap in economic readiness among the participating countries,” Lemhannas governor Agus Widjojo told a presser on Friday.

Agus pointed out how Indonesia’s global competitiveness index ranked 34th out of 144 countries. This portrays Indonesia’s lacking competitiveness, infrastructure, connectivity, and education. 

“Export-wise, Indonesia ranks fourth in the Asean region. On imports, Indonesia has not shown its strength as a raw material-producing country, thus placing [Indonesia] in the third position after Singapore and Malaysia,” he said. 

Products that meet the Indonesian national standard (SNI) are also still quite limited in number. “So [they] will not be much help in competing against imported products when RCEP takes effect,” Agus told the conference.

The RCEP is expected to give a major boost to economic recovery. The trade deal also gives Indonesia an opportunity to promote its exports and attract foreign investments into the country, according to Agus. 

“We should not view the opening of the labor market with skepticism [by thinking] it will lessen job opportunities for Indonesian workers. We should address this situation appropriately, as this is an opportunity to boost technology transfer for our workforce," Agus said.

The Lemhannas governor also called for concrete steps to open up the widest opportunities possible for local workers to polish up their skills. This is to anticipate investors favoring foreign workers who tend to possess competitive skills, rather than hiring locals.

“To better prepare the Indonesian economy for RCEP in 2022, it is necessary to improve our business and investment climate, aimed at boosting the competitiveness of [our] products and workforce,” Agus added.

The RCEP will enter into force on January 1, 2022. Signing the trade pact were the 10 Asean member states, China, Japan, South Korea, Australia, and New Zealand. 

The RCEP will eliminate up to 90 percent of the tariffs on imports between its signatories over the next 20 years.

Indonesia still has not ratified the trade deal. According to news outlet Antara, Indonesia plans to ratify the RCEP in the first quarter of 2022.

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