Advent of the Era of the AEC and Its Impacts on Singapore and Indonesia(40)

Comparative Study on the Perception and Response of Singapore and Indonesia

As identified above, Singapore and Indonesia may have been claimed to pour continuous efforts to cope with the era of the AEC. Both countries have concentrated on the advent of the AEC and the impacts that the new regional economic community would bring to them. 

Nevertheless, there are yet complaints especially from the private sectors in both countries that incomplete information sharing and insufficient corporate engagement on the core agendas of the AEC has been left shortages. 

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.

Advent of the Era of the AEC and Its Impacts on Singapore and Indonesia(34)

Comparative Study on the Perception and Response of Singapore and Indonesia

In this respect, Singapore has spent more than US$120 million cumulatively in various initiatives and training programs to help narrow the gaps among ASEAN economies. Results of SWOT analysis on the Singapore's perception of and response to the formation of the AEC can be diagramed as below. 

According to the papers by Hadi Soesastro and Raymond Atje (p. 72-77.) and Widdi Mugijayani and Pratiwi Kartika (p. 210-212.), Indonesia's major perception of and response to the formation of the AEC can be summarized as below.

Advent of the Era of the AEC and Its Impacts on Singapore and Indonesia(33)

Comparative Study on the Perception and Response of Singapore and Indonesia

A more basic reaction from businesses is tied to the process itself of drawing up the ASEAN economic agreements. An underlying concern is that the agreements are concluded without the involvement of or consultation with the private sector. 

Consequently, there is lack of familiarity or limited knowledge of the workings and details of the agreements and their impact on business. Going forward, Singapore will focus on capacity building and human resource development in the ASEAN countries to help them prepare for the 2015 deadline.

 

Advent of the Era of the AEC and Its Impacts on Singapore and Indonesia(32)

Comparative Study on the Perception and Response of Singapore and Indonesia

SME leaders in Singapore have urged fellow companies to expand within the region and to seriously consider investing in ASEAN neighbors for the many benefits that an integrated ASEAN economic community can bring. 

The larger players, being more experienced, point out that whilst the ASEAN agreements are being help up as the way forward, delays or non-implementation of signed agreements are too common occurrences.

Advent of the Era of the AEC and Its Impacts on Singapore and Indonesia(31)

Comparative Study on the Perception and Response of Singapore and Indonesia

Thus, while Singapore acknowledges that some problems are faced by the ASEAN countries in implementing the AEC Blueprint, there is an urgent need to persevere in order for the region to remain competitive and relevant to the global economy. 

While it fully supports efforts taken to accelerate internal integration towards AEC 2015, the ASEAN needs to deepen its engagement with key trading partners in parallel. It is significant that SMEs  tend to be in the more optimistic category in relation to regional integration.  

Advent of the Era of the AEC and Its Impacts on Singapore and Indonesia(30)

Comparative Study on the Perception and Response of Singapore and Indonesia

Singapore remains committed and continues to work closely with the other ASEAN countries to achieve the goals of the AEC as set out in the AEC blueprint. According to the latest AEC Scorecard, Singapore has registered more than 93 percent implementation of the requirements in the AEC Blueprint for the period 2008 to 2009.

Singapore believes that a strong and competitive ASEAN is important in the face of growing challenges posed, not just to the Southeast Asian economy, but the global economy.