The Jakarta Post , Jakarta | Sat, 12/26/2009 12:50 PM | Business
Furniture producers in Southeast Asia have come together and voiced concern over possible negative impacts on their businesses from full implementation of the ASEAN-China Free Trade Agreement next year.
Fears over failure in competing with "cheap products" from China has forced producers to propose to their governments postponement of final FTA implementation stages.
Ambar Tjahjono, the chairman of the Association of Indonesian Furniture and Handicraft Exporters (Asmindo), said that furniture businesses in all ten member countries of ASEAN (the Association of Southeast Asian Nations) had a common understanding of the threat posed by the ASEAN-China FTA.
"Like us in Indonesia, furniture producer associations in ASEAN, especially Thailand, Philippines, Vietnam, Myanmar and Malaysia, are now lobbying their governments to find ways to suspend *full* free trade implementation with China on furniture products," Ambar said over the weekend.
He said that the representatives of furniture industries associations in the region had met several times to discuss the China FTA issues.
There are 314 tariff posts from eight sectors under the FTA. Asmindo, Ambar said, had been lobbying Indonesian authorities to modify or suspend five of 12 tariff posts linked to the furniture sector.
Ambar acknowledged that China's cheap and low-quality products were a serious threat to the domestic market. "They would ruin the prices. We are not ready yet to face them," he said.
Ambar said the full FTA would hit the domestic furniture market with imports taking up to 50 percent of it.
He said that foreign penetration of the domestic furniture market already stood at about 30 percent.
"Most imported furniture products are coming from China, Thailand and Vietnam," Ambar said.
He agreed most Indonesian producers relied on exports and should not be too threatened by products from China in the domestic market.
"Our exports have yet to fully recover from the impact of the economic crisis," he said, adding most domestic firms relied on exports.
According to Asmindo's 2008 data, there are 4,700 furniture companies in the country. Of that figure, about half are exporters.
In 2008, furniture and craft exports reached US$2.65 billion while domestic sales were only $700 million, Ambar said.
He said the global downturn had hurt furniture exports, threatening closure for more than 100 firms and dismissals of up to 1 million workers.
Asmindo expects a drop in exports of 15 percent this year, down to about $2.2 billion from last year.
As of July, Indonesia's furniture and craft exports reached $998.35 million, down from $1.24 billion in the same period last year.
According to Asmindo's 2008 data, China was the biggest global furniture exporter with US$27 billion in 2008. In ASEAN, Indonesia's furniture exports were lower than Vietnam's ($ 3.6 billion).
Ambar hoped government would implement Indonesia National Standards (SNI) for furniture products as part of non-tariff barriers to counter FTA negative impacts. (bbs)
(http://www.thejakartapost.com/news/2009/12/26/asean-firms-ask-fta-delay-furniture.html)
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