Beruflich Dokumente
Kultur Dokumente
By:
Meyta Hana Merylana 700291
Pratama Adi Nugraha 700292
Bina Andhika 700293
Novi Amalia Santika Putri 700294
Rafi Achas Muhammad 700295
Table of Contents
1. Introduction...................................................................................................... 1
2. Literature Review.............................................................................................. 3
2.1
Goods Trade Agreement: ASEAN-Korea FTA between ASEAN and South Korea. 3
2.2
2.3
2.4
Theoritical Framework.................................................................................. 7
3. Methodology..................................................................................................... 8
3.1
Method of Analysis...................................................................................... 9
3.2
5.2
Conclusions............................................................................................. 19
6.2
Recommendations.................................................................................... 20
References......................................................................................................... 22
ii
1. Introduction
In todays world, no country can be separated from international trade. International
trade is the exchange of goods or services along international borders. This type
of trade allows for a greater competition and more competitive pricing in the market.
The competition results in more affordable products for the consumer. The exchange
of goods also affects the economy of the world as dictated by supply and
demand, making goods and services obtainable which may not otherwise be
available to consumersglobally.
Global trade allows wealthy countries to use their resources - whether labor.
technology or capital - more efficiently. Because countries are endowed with
different assets and natural resources (land, labor, capital and technology), some
countries may produce the same good more efficiently and therefore sell it more
cheaply than other countries. If a country cannot efficiently produce an item, it can
obtain the item by trading with another country that can. This is known
as specialization in international trade.
In international trade, trade agreement also made between two countries or more
than two in order to improve trade with each other, for example by removing taxes.
This paper will see and focus on one trade agreement which is ASEAN-Korea Free
Trade Area (AKFTA). It is a trade agreement which involving ASEAN countries
(including Indonesia) and South Korea. Preferential treatment is given to countries
that are members of the agreement in three sectors: sector of goods, services, and
investment, with the aim to speeding the flow of goods, services, and investment
among member states so as to form a free trade area. AKFTA initial negotiation
process began in early 2005 and on December 13, 2005 Framework for
1
model of the four sectors, one of the components of national income is the
contribution of exports. Positive changes contribution of exports to national income of
Indonesia and South Korea in conjunction with Indonesia-South Korea trade
indicates the positive impact of AKFTA against both countries.
Preferential tariff scheme on ASEAN-Korea Free Trade Area (AKFTA) Trade
Agreement in Goods have been above seven years after its entry info force on July
1, 2007, as stated in Minister of Finance Decree Number 131/PMK.011/2007. Its
impact assessment should be conducted to review the expected gains for Indonesia
and its country partner. South Korea from joining the agreement. This paper
employed a quantitative approach to measure and analyze the gains received by the
two countries in AKFTA Trade Agreement in Goods from the increase of export
growth and export contribution to national income.
2. Literature Review
2.1 Goods Trade Agreement: ASEAN-Korea FTA between ASEAN and
South Korea.
ASEAN-Korea Free Trade Area (AKFTA) is an agreement between ASEAN member
countries with South Korea, which aims to create a free trade area in the three main
sectors, namely trade in goods, trade in services, and investment. In trade in goods,
the efforts is through the elimination or reduction of tariff barriers or non-tariff.
According to Article 2.1 of the Framework Agreement Comprehensive Economic
Cooperation between ASEAN and Korea on trade in goods, both ASEAN and South
Korea have agreed on a progressive reduction scheme and the elimination of export
duties (tariffs) and other regulations (non-tariff) that is inhibiting. Exclusion of goods
from the scheme governed by Article XXIV (8) (b) of GATT 1994).
3
2.2
lines to 0-5% since the agreement effective goods, a minimum 90% rate no later than
1 January 2009, and eliminate all the tariff items at the latest January 1, 2010 with
maximum flexibility 5% of tariff lines and deadlines rates to 0% can be postponed no
later than January 1, 2012.
Regarding the Sensitive Track, the products fit into the category of the Sensitive
Track is a product that is considered sensitive and import duty rates will be lowered
with a slower pattern than the product in the category of Normal Track. There are 464
tariff lines (HS-6 digit) in the list of products Sensitive Track AKFTA agreement. The
464 tariff lines among others: products related to fisheries, rice, sugar, wine-alcohol,
chemical products, textiles, and steel.
The maximum number of tariff lines in the Sensitive Track ASEAN 6 and South Korea
is 10% of the total tariff lines (Total HS. 6 Digit = 5.225 tariff lines or Total HS. 10 Digit
= 11 171 tariff lines) and 10% of the total value of imports from South Korea or from
ASEAN as a whole based on last year trade data. Sensitive Track 2 is divided into:
(i) Sensitive List (SL)
- Lowering MFN tariffs applicable to the Sensitive List to 20% no later than
January 1, 2012.
- This rate will be gradually reduced to 0-5% not later than January 1, 2016.
(ii)
Highly Sensitive List (HSL). with a maximum of 200 tariff lines (HS 6-digit) or
3% of the total tariff lines and 3% of the total value import of individual ASEAN
countries of South Korea and vice versa.
ASEAN and South Korea agreed on the use of general rule to set the rules of origin
of goods by using a regional value content of not less than 40% of FOB (known as
5
RVC-40) or a Change of Rates Heading (CTH) and Product Special Rules (PSR) for
products that do not use the general rule.
2.3
Regulation of the Minister of Finance No. 131 / PMK.011 / 2007 dated October
30, 2007 on the Amendment to the Regulation of the Minister of Finance No.
75 / PMK.011 / 2007 on the Establishment of rates of import duty in the
framework of the ASEAN-Korea Free Trade Area. which has a validity and
retroactively from 1 July 2007.
2.4
Theoritical Framework.
Research Dee (2011) using CGE models conclude that the increasing in openness of
the market as a result of trade liberalization policies (including a free trade
agreement/FTA, preferential trade agreements/PTA, custom union, common market)
may cause a positive contribution to the national income and growth economy, job
creation and productivity growth. For a country that suffered a surge in
unemployment rate increases due to the current economic crisis, the benefits in the
short term is the unemployment rate. While the benefits in the long term is even more
important to increase economic activity and growth in productivity.
From the point international trade theory point of view, the positive impact of an FTA
or PTA (eg AKFTA) can be described in models of preferential trade (Markusen
1995). In these models (in the context of AKFTA), preferential trade will lead to trade
creation and trade diversion that would increase domestic welfare Indonesia and
South Korea. In a simple model of preferential trade, domestic trade creation will
improve the welfare of both parties.
Furthermore, Lloyd and MacLaren (2004) explains that there are three main
variables that most relevant in the assessment of the impact of an FTA on member
states and non-members, namely: (1) national income, (2) the terms of trade, and (3)
welfare (welfare).
7
3. Methodology
Based on the Regulation of the Minister of Finance No. 131 / PMK.011 / 2007 dated
October 30, 2007, the general scheme AKFTA rates that have been described in
section 2.2 will be effective from July 1, 2007. so the time of this writing drafted (in
November 2014) the scheme has been running more of seven years.
This study will simulate what if the period July 1, 2007- June 31, 2013 AKFTA tariff
scheme is not applied, so that by comparing with the actual conditions in the same
period (which actually AKFTA tariff scheme has been effective) can calculate the
impact of the AKFTA tariff scheme implementation to the national income.
Contribution to national income will be calculated by the comparison of increasing in
the value of exports goods in trade relations between Indonesia - South Korea with
AKFTA tariff scheme and the simulation results without AKFTA tariff scheme. The
increase in the value of exports affect the national income between two countries,
because the value of exports is one of the components of the national income of the
Keynesian model of the four factors.
In this study, the approach that is used to measure the impact of market openness
through FTA for Indonesia and South Korea are the contribution to the national
income as stated by Dee (2011) and Lloyd and MacLaren (2004). If the contribution
is positive, the positive impact of the FTA between the two countries, and vice-versa.
As mentioned earlier, the contribution to the national income measured by a
comparison of the increase in the value of exports between the two countries with
AKFTA tariff scheme and the simulation results without AKFTA tariff scheme at a
certain period.
8
It is assumed in this study that economic factor which has a significant effect on the
time after July 1, 2007 is AKFTA tariff scheme, while other economic factors that
may affect trade between Indonesia and South Korea in the period July 1, 2007 June 31, 2014 is fixed (ceteris paribus) or insignificant so that it can be ignored.
3.1
Method of Analysis
To simulate the conditions without AKFTA scheme. this study used a model
calculation of average from Forecast Excel Function.
Forecast Excel has function to Calculates, or Predicts, a future value by using
existing values. The predicted value is a y-value for a given x-value. The known
values are existing x-values and y-values, and the new value is predicted by using
linear regression. This function can be used to Predict future sales, inventory
requirements, or consumer trends.
The equation for FORECAST is a + bx. where:
equation
and:
Where
Then the trading conditions with and without the FTA is compared. It is assumed that
the other factors that can affect the trade flow with FTA and without FTA is rejected or
ignored.
3.2
The source of data is the Indonesias exports to South Korea and Indonesias import
from South Korea, data compiled by the Directorate General of Customs, Ministry of
Finance, Ministry of Industry, Bank of Indonesia, and Statistics Indonesia.
The variables in this study are Indonesias and South Koreas export with AKFTA
tariff scheme, as well as simulation results of Indonesian exports and imports of
South Korea without AKFTA tariff scheme. Observation period of research variables
is 7 period-years after AKFTA tariff is regulated (1 July 2007-30 June 2013) and 7
period-years before AKFTA tariff is regulated (1 July 2000-30 June 2007).
number of exports and imports. The exports from Indonesia to South Korea fell to
30% from 2008.
After the recession in 2008/2009, both countries Indonesia and South Korea began
to improve. In 2010, the total exports from Indonesia to South Korea increased by
60%, and the total Indonesian imports from South Korea increased by 64%.
Indonesia as one of ASEAN member countries with most populous and largest
market has good relations with South Korea, especially after the forming of ASEANKorea FTA. Total Indonesias and South Koreas trade reached US $ 23.1 billion
(2013), in which the Indonesian exports to South Korea in 2014 reached US $ 11.4
billion and imports of Indonesia from South Korea in the same year reached US $
11.6 billion dollars. The amount represents 6% of total exports and total imports of
Indonesia.
From the total trade between two countries during the 5 (five) years (2009-2013)
shows a positive growth by an average of 16.95% with a trade surplus was on the
side of Indonesia. Yet In 2013, Indonesia recorded a trade deficit of US $ 170 million,
a decrease of 94.1% compared to the year 2013 in when Indonesia recorded a
surplus of US $ 3.08 billion.
Indonesian exports to South Korea are dominated by Rubber. Statistics Indonesian
data in the year of 2011 stated that Rubber exports worth US$ 564 million. The
second and third most exported products are Textile and Steel respectively. Textile
exports to South Korea valued US$ 513 million, while Steel exports worth US$ 413
million. Furthermore, commodites exported in the same year followed by Paper Pulp
(US$ 363 million), Electronics (US$ 323 million), Chemicals (US$ 253 million) and
Palm Oil (US$ 247 million).
11
Meanwhile South Korea's exports to Indonesia (or Indonesian imports from South
Korea) are dominated by steel machines and automotive imports worth US$ 2.4
million with 32.26% positive trend in the past 5 years. The second and third most
imported products are Textile and Chemicals respectively. In 2011, textile imports
valued US$ 1.4 million while chemicals imports worth US$ 1.3 million. Furthermore,
commodity imports in the same year followed by Electronics (US$ 924 Million),
Copper Tin (US$ 250 million), Alumunium (US$ 134million) and Electricity tools (US$
123 million). The least imported product is Rattan Processed. worth only US$ 500.
12
In 2012 South Korea was ranked 7 of exports destinations and ranked 6th country of
origin of imported Indonesian. Contribution of Indonesia's exports to South Korea
from Indonesia's total exports amounted to 4.3% and the contribution of imports from
South Korea amounted to 6% of the total imports of Indonesia. China and Japan are
still the main exporters and importers of Indonesia.
ASEAN Countries such as Thailand, Singapore, Malaysia, ranked in top 10 export
and import of Indonesia. This defines that ASEAN FTA is contributing well to its
members.
13
Figure 5.1: Forecast Result Indonesias Export to South Korea without AKFTA
Tariff (in US$)
14
The total value of Indonesia's exports to South Korea for 7 years after the forming of
preferential tariff scheme ASEAN-Korean FTA (the period July 2007-June 2014) was
US$ 82,352,702,226. While the absence of preferential tariff schemes AKFTA, the
total value of Indonesia's exports to South Korea will only reach US$
71,021,442,025. Thus, the existence of preferential tariff AKFTA have an impact on
increasing the total value of Indonesia's exports to South Korea net for 7 years since
the establishment of AKFTA for US$ 11,331,260,201 or an average of US$
1,618,751,457 per year. For the actual conditions in which the AKFTA scheme
applies, by comparing the data before AKFTA period (1) until (7) with the data after
AKFTA in the same period (1) until (7) can be seen the impressive improvement.
Before AKFTA was formed. the total value of Indonesias exports to South Korea from
period (1) until period (7) was US$ 37,168,745,581. Meanwhile, after the
establishment of AKFTA the total value of Indonesias exports to South Korea was
US$ 82,352,702,226. The growth was 121%.
Table 5.1: Indonesias Export Value to South Korea With and Without AKFTA
Tariff
Period
Pra Akfta
Jul2000-Jun2001 (1)
4,320,543,148
Jul2001-Jun2002 (2)
3,379,414248
Jul2002-Jun2003 (3)
4,313,309,390
Jul2003-Jun2004 (4)
4,389,018,221
Jul2004-jun2005 (5)
5,699,695,858
Jul2005-Jun2006 (6)
7,521,824,708
Jul2006-Jun2007 (7)
7,544,940,008
Actual
Condition
(With AKFTA)
Forecast
Result
(without AKFTA)
15
Pasca
AKFTA
Jul2007-Jun2008 (1)
9,531,703.903
8,073,306,221
Jul2008-Jun2009 (2)
6,672,071,257
8,764,177,577
Jul2009-Jun2010 (3)
11,081,674,716
9,455,048,933
Jul2010-Jun2011 (4)
14,227,355,334
10,145,920,289
Jul2011-Jun2012 (5)
17,661,502,047
10,836,791,645
Jul2012-Jun2013 (6)
12,026,183,705
11,527,663,001
Jul2013-Jun2014 (7)
11,152,211,264
12,218,534,357
For the forecast conditions, in which the AKFTA scheme was not applied, the total
value of Indonesias exports in the period (1) until (7) to South Korea was US$
71,021,442,025. The growth was 91%.
So, the enactment of tariff scheme AKFTA has an impact on improving Indonesias
exports to South Korea more than 30% (121%-91%).
5.2
Figure 5.2: Forecast Result South Koreas Export to Indonesia without AKFTA
Tariff (in US$)
16
value of Indonesias imports to South Korea was US$ 63.317.272.217. The growth
was 292%.
Table 5.2: South Koreas Export Value to Indonesia With and Without AKFTA
Tariff
Period
(US$ 000)
Pra Akfta
Jul2000-Jun2001 (1)
2,690,226,160
Jul2001-Jun2002 (2)
1,735,393,355
Jul2002-Jun2003 (3)
1,623,731,582
Jul2003-Jun2004 (4)
1,628,476,089
Jul2004-jun2005 (5)
2,330,585,026
Jul2005-Jun2006 (6)
2,550,631,762
Jul2006-Jun2007 (7)
3,578,598,905
Actual Condition
Pasca
AKFTA
(With AKFTA)
AKFTA)
Jul2007-Jun2008 (1)
5,065,948,416
3,020,013,053
Jul2008-Jun2009 (2)
5,587,833,925
3,198,671,928
Jul2009-Jun2010 (3)
6,120,808,775
3,377,330,803
Jul2010-Jun2011 (4)
10,062,580,318
3,555,989,677
Jul2011-Jun2012 (5)
13,116,735,140
3,734,648,552
Jul2012-Jun2013 (6)
12,010,702,537
3,913,307,427
Jul2013-Jun2014 (7)
11,352,663,106
4,091,966,302
For the forecast conditions, in which the AKFTA scheme was not applied, the total
value of Indonesias imports in the period (1) until (7) to South Korea was US$
24.891.927.742. The growth was 54%.
So, the enactment of tariff scheme AKFTA has an impact on improving Indonesias
imports from South Korea almost six times (292%/54%).
18
Conclusions
Both Indonesia and South Korea are benefited by the application of tariff scheme
AKFTA. With the preferential tariff scheme for goods, the long term benefits can be
seen from the positive trend of increased activity in the export trade relations
between the two countries.
From Indonesian perpective, according to the comparative analysis with AKFTA
conditions and simulation results without AKFTA conditions during the observation
period July 1, 2007 through June 31, 2014, it is known that the scheme AKFTA rates
have an impact on the increase in the value of Indonesia's exports to South Korea by
an average of US $ 1,618,751,457 per year. Thus AKFTA scheme provides a direct
impact through increased export value contribution to the Indonesian national income
by an average of US $ 1.618.751.457 per year.
Note that in this study, all the factors that affect the economy are ignored. Therefore,
it can be seen when the year 2012 to the year 2013 there was a rapid decline in the
value of Indonesias exports to South Korea. This is due to several factors that are
not accepted in this study.
Whereas, from the South Korean perspective, the AKFTA scheme rates have an
impact on the increase in the value of South Korea's exports to Indonesia by an
average of US $ 5,489,334,925 per year. The magnitude of these numbers is a direct
result of the contribution of the value of exports to South Korea's national income.
Increased market-openness because of AKFTA tariff scheme as indicated by the
increase in the value of exports in trade relations between the two countries shows
19
the occurrence of trade creation and trade diversion. Based on the theory of
international trade, AFKTA has indirectly positive impact on job creation, productivity
growth, and economic welfare for AKFTA member countries, especially Indonesia
and South Korea as the objects of this study .
6.2
-
Recommendations
Potential growth in Indonesian exports with AKFTA tariff scheme will be even
greater if more Indonesian exporters who maximize the opportunity of AKFTA
special rates.
20
References
Carbaugh, R. J. (2009). International Economics. Mason, OH: South-Western
Cengage Learning.
Dee, Philippa et al. 2011. The Impact of Trade Liberalisation on Jobs and Growth.
OECD Trade Policy Working Papers No. 107.
Ministry of Trade. (2014). Indonesia Balance of Trade with Trade Partner. Retrieved
from http://www.kemendag.go.id/id/economic-profile/indonesia-exportimport/balance-of-trade-with-trade-partner-country?negara=114
Ministry
of
Trade.
(2014).
Economy
Profile,
Export
Import.
http://www.kemendag.go.id/id/economic-profile/economic-indicators/indonesiaexport-import
Office
Support
Function.
https://support.office.com/en-us/article/FORECAST-
function-8736aaa2-8a94-4358-b107-6cc0c8e90ffc?ui=en-US&rs=en-US&ad=US
Setiawan, Sigit 2012. Kajian Ekonomi dan Keuangan
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