THE ECONOMIC IMPACT OF ACFTA ON INDONESIA –PEOPLE REPUBLIC OF CHINA TRADE RELATION (2010-2014)

Abstract

ACFTA was implemented in 2010. This ACFTA has three main sectors which are: Trade in goods, services, and investment. Framework agreement of each sectors were implemented gradually. Framework agreement on trading in goods was signed in 2004. Framework agreement of trade in service was signed in 2007. Moreover, for the investment agreement it was agreed in 2010. This research concerns more on trade in goods sector. After ACFTA implementation, total trade between ASEAN and PRC shows significant improve. ASEAN become third largest trade partner for PRC and PRC become the largest partner on trade for ASEAN. Year by year total trade had been increasing. This condition was influenced and contributed by total trade between each of ASEAN member countries and PRC. This research aims to analyze of what is economic impact of ACFTA on Indonesia-PRC bilateral trade. Historically, Indonesia-PRC has a dynamic relation era by era. In reform era, the trade relation between Indonesia and PRC has been getting closer and stronger. PRC and Indonesia has potential market for both that could benefit each other within their big population. Several MOU on trade before AFCTA has been conducted by both countries. However, after ACFTA the volume trading between those two countries has been increasing year by year. PRC becomes the main trading for Indonesia while Indonesia becomes third largest trading partner for PRC in ASEAN. In trading volume, the problem that is faced by the countries is about export and import volume. A country that has bigger power in economic usually export more than import. This condition makes the country suffer surplus while the one who import more get economic impact by suffering deficit. Reflecting to ASEAN-PRC trading volume before ACFTA in 2005-2009, ASEAN exported more to PRC. Nevertheless after ACFTA implementation, since PRC had been growing as economic super power, it exported more to ASEAN. What is the impact on Indonesia-PRC trade relation.