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ASEAN-China FTA Impact on Indonesian Manufacturing Industry

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  • Mohamed Aslam

Abstract

In November 2002, ASEAN and China signed a Free Trade Area (ACFTA) agreement. The rapid growth of China since the early 1990s had caused trade and investment diversions to ASEAN. The strong competition between the regions in the international commodity market and productive foreign capital has produced a great deal of stress within ASEAN economies. Theoretically only countries that have the lowest cost of production will gain in trading. With respect to Indonesia, the Business Chamber of Commerce Indonesia (KADIN) and industrialists, had complained that the ACFTA actually caused losses to local manufacturers and businesses. This paper investigates the impacts of the ACFTA on the Indonesian manufacturing sector, from producer and exporter sides, i.e supply side. Based on calculated trade performances indices such as revealed comparative advantage, intra-industry trade, and the Hillman index, KADIN complaint had a merit.

Suggested Citation

  • Mohamed Aslam, 2018. "ASEAN-China FTA Impact on Indonesian Manufacturing Industry," Journal Global Policy and Governance, Transition Academia Press, vol. 7(1), pages 33-56.
    • Handle: RePEc:ase:jgpgta:v:7:y:2018:i:1:p:33-56:id:229
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