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Challenge for ASEAN-China free trade agreement on Indonesia employment

Author

Listed:
  • Fatimah Riswati
  • Indro Warsito

    (Fakultas Ekonomi, Universitas Wijaya Putra
    Badan Penelitian dan Informasi, Departemen Tenaga Kerja dan Transmigrasi)

Abstract

This research analyzes the challenges for Indonesian economy towards the implementation of ASEAN-China Free Trade Area (ACFTA) especially on employment opportunity in Indonesia. Using regression technique, the labour cost and change in fix capital are statistically significant in influencing the employment opportunity. This result implies that ACFTA will challenge the Indonesian competitiveness due to increasing labour cost, while ACFTA also potentially increases capital flow from China which has ambiguous impacts on labour absorption. The SWOT (Strength, Weakness, Opportunity and Threat) analysis recommends for Indonesian government to improve comprehensive strategy of national industry to be more competitive to China products.

Suggested Citation

  • Fatimah Riswati & Indro Warsito, 2010. "Challenge for ASEAN-China free trade agreement on Indonesia employment," Economic Journal of Emerging Markets, Universitas Islam Indonesia, vol. 2(1), pages 89-100, April.
    • Handle: RePEc:uii:journl:v:2:y:2010:i:1:p:89-100
    DOI: http://dx.doi.org/10.20885/vol2iss1aa2387
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    More about this item

    Keywords

    ACFTA; employment opportunity; structural equation model;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission

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