Advent of the Era of the AEC and Its Impacts on Singapore and Indonesia(39)

Comparative Study on the Perception and Response of Singapore and Indonesia

However, the number of major players is very small and accounts for less than one percent of the total number of business establishments in Indonesia. 

In addition, in general, information concerning the AEC fails to reach most members of the business community largely due to the fact that both government and the ASEAN secretariat do not have a systematic mechanism to disseminate information. Results of SWOT analysis on the Indonesia's perception of and response to the formation of the AEC can be diagramed as below.

 

Advent of the Era of the AEC and Its Impacts on Singapore and Indonesia(38)

Comparative Study on the Perception and Response of Singapore and Indonesia

Larger firms tend to have better knowledge about the existing FTAs and, in general, are more optimistic than smaller ones. This is true also with regard to the AEC. Major players already have a good and comprehensive understanding about the AEC. 

The major players are large companies whose activities are related to export-import, foreign companies, and foreign affiliates or local companies that are involved in international production networks.

Advent of the Era of the AEC and Its Impacts on Singapore and Indonesia(37)

Comparative Study on the Perception and Response of Singapore and Indonesia

In 2007 Indonesia introduced a new investment law aimed at making Indonesia more attractive to foreign investors. 

Indonesia is one of the few countries in the ASEAN that has promulgated a competition law and has established an independent agency in charge of competition policy – the Commission for the Supervision of Business Competition. 

Advent of the Era of the AEC and Its Impacts on Singapore and Indonesia(36)

Comparative Study on the Perception and Response of Singapore and Indonesia

In 2004 Indonesia introduced a two-phase tariff harmonization program with the main objective of moving towards low and uniform tariff rates and avoiding tariff escalation. 

As a member of the WTO and the ASEAN, Indonesia has submitted to commitments for services liberalization at the global and regional levels to the General Agreement on Trade in Services (GATS) and the ASEAN Framework Agreement on Service (AFAS).

 

Advent of the Era of the AEC and Its Impacts on Singapore and Indonesia(35)

Comparative Study on the Perception and Response of Singapore and Indonesia

To its credit the Indonesian Government has taken the necessary steps to incorporate its commitments to the AEC into the country's national economic development programs. 

With regard to its commitments to the AEC, there is, unfortunately, no simple way to verify the degree of the Indonesian Government's compliance. Ever since Indonesia initiated trade liberalization in the mid-1980s, it has significantly reduced tariff rates, more or less across the board.