Indonesia Must Ratify RCEP to Reap Economic Benefits: Expert

TheIndonesia.id - Expert said the Indonesian government must immediately ratify the Regional Comprehensive Economic Partnership, or RCEP, so national economy can fully benefit from the agreement.

Board member at Center Indonesian Policy Studies (CIPS) Donna Gultom said the free trade agreement (FTA) between Asean member states and its partner states, which will take effect on January 1 next year, has the potential to result in successful cooperation between states, thus providing abundant benefits. But it’s up to each country on how to prepare themselves to enter the agreement.

“China potentially benefits the most from RCEP because of its prepared industries. However, it’s not impossible that Indonesia will gain similar benefits,” Gultom said in a statement on Tuesday, December 28, as reported by Antara.

According to her, the Indonesian government may start with creating structural and policy adjustments that will enhance national economy’s competitiveness. While controversial, Omnibus Law on Job Creation, is deemed as one of the solutions.

“One of the structural and policy adjustments that has been made by Indonesia is the issuance and implementation of Job Creation Law. The competitiveness of national products will improve if the Law is implemented effectively,” the expert explained.

The idea of RCEP was first introduced in 2011, and after ongoing negotiations, it was signed in November 2020 during the virtual Asean summit. Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam, China, Japan, South Korea, Australia, and New Zealand signed the world’s largest trade bloc, while India decided not to sign after previously being involved in initial negotiations.

Gultom said Indonesia’s involvement in a partnership at this scale will help the development of national industries, and she predicted that benefits gained from RCEP may start being visible five years from ratification with 8-11 percent of potential increase from export and 18-22 percent from investment.

Subsequently, the increasing investment is expected to contribute to the creation and development of new industries, including value-added manufacturing, which won’t only reach RCEP countries but also global market at large.

Indonesia has yet to finalize the ratification, but other steps have been made by the government to ensure the country’s preparedness in welcoming RCEP next year. Besides encouraging the simplification of business licensing through Job Creation Law, Indonesia continues to develop the 4.0 industry to accelerate digital transformation. Lastly, Indonesia will continue to intensify coordination and cooperation between central and regional governments, Chamber of Commerce and Industry, associations, FTA Center, and academics.