TPP needed to offset “low-quality trade” with China: Economist

(THEJAKARTA POST)IndonesiashouldconsiderjoiningtheTrans-PacificPartnership(TPP)agreementaspartofastrategytoreducedependencyonChina,whichmostlyconsumesrawmaterialsandlow-gradeproducts,aneconomisthassaid.

AccordingtoBankCentralAsia(BCA)chiefeconomistDavidSumual,theTPPcouldbeawaytoboostadvancedindustry.Theagreementmightattractadvancedtechnology-basedinvestorsfromtheTPPmembercountriestoinvestinIndonesiaanddevelopadvancedindustries.

"IfwereliedheavilyonChina,ourexportswillbemainlycommodities,cheaplow-value-addedproductswithalackoftechnologybutlotsofenvironmentalissues.WeneedtheTPPtobalanceourtrade,"hesaidtothejakartapost.cominJakartaonFeb.18.

Asidefromthat,developedcountriesintheTPPsuchasJapanandtheUSwereleavingthelaborintensivesectorsinwhichIndonesiaisgood,suchasinmakinggarments,textilesandfootwear.ItopenedanopportunityforIndonesiatosurviveinthecompetition.

However,Davidsupportedthegovernment’sstancenottorushtojointheTPPandtochoosetocreateaspecialteamtoassessthecostsandbenefits."Itisbettertotakealongertimebeforedeciding,especiallyasIndonesiaisnotreadyyet.Butdonottaketoolong,aswemaylosemomentum."

AlsoofconcernweretheneweconomicdynamicsamongtheTPPmembers.InJapan,Abenomicshasyettorevivetheeconomyandhaslostpublicconfidenceamidindustriallosses,whileintheUSdebatesontheTPPwereheatingupasmorepresidentialcandidatesattackedtheagreement.

InJapan,AbenomicsisbeingchallengedbecauseJapan'seconomyfailedtoescapedeflationamidfallingprofitsandmassivelayoffsamongJapanesecorporations.TheBankofJapanevenlaunchedanegativeinterestraterecentlytocombatdeflation.

IntheUS,HillaryClintonrecentlycriticizedthetradeagreement,alongwithotherpresidentialcandidatessuchasBernieSandersandMartinO'Malley.EvenPresidentObama’sparty,theDemocraticParty,opposedthetradingagreement.

TheTPPissupposedtoberatifiedassoonasMayorJunethisyearafterbeingformallysignedinNewZealandinJanuary.

"ParliamentoftheTPPmembersneedtoratifyitandittakesmorethantwoyears.Untilthen,theagreementwillnotcomeintoeffectyet.ItgivesustimetoassestheTPP,"InstituteforDevelopmentofEconomicsandFinance(INDEF)economistBerlyMartawardayasaid.