Welcoming Dinner First ABAC Meeting, 21 Januari 2008


Keynote Speech
Menteri Luar Negeri Republik Indonesia

Pada acara Welcoming Dinner
First ABAC Meeting

21 Januari 2008

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Mr. Mohamad S. Hidayat, Chairperson of the Indonesian Chamber of Commerce and Industry,
Mr. Juan Francisco Raffo, Chairperson of ABAC 2008,
Mr. Arwin Rasyid, Indonesian Representative to ABAC,
Excellencies Ambassadors of APEC Economies,
Distinguished ABAC Delegates,
Ladies and Gentlemen,

I am pleased and honoured to address this distinguished audience tonight. For this privilege, I wish to thank ABAC Indonesia and the Indonesian Chamber of Commerce and Industry for inviting me to address this welcoming dinner. Thank you. You have done your country proud by hosting the first ABAC Meeting of 2008.

Any meeting of ABAC is naturally an important one in the view of APEC. The reason for this is simple: APEC would not be what it is today without the support and the deep involvement of ABAC in its work.

In the first place, APEC today is the major force for fostering trade in the Asia-Pacific region. Trade among APEC economies is significant and growing. Intra-APEC merchandise trade has more than doubled since 1994, from US$1.4 trillion to over US$3 trillion .  

APEC is on track to meeting its Bogor Goals. It has greatly helped that in 2007, our APEC Leaders agreed to implement a series of measures that strengthened regional economic integration—on the basis of bold recommendations submitted by ABAC to the APEC Economic Leaders Meeting of 2006.

Among the most crucial issues that APEC is addressing today are facilitation and structural reform. Today the main obstacle to trade is no longer tariff barriers but red tape and other occasions of inefficiency.

Both facilitation and structural reform can reduce the high cost of inefficiency, making our APEC economies more globally competitive. Studies conducted by APEC show that cutting red tape at country borders add twice as much to GDP as tariff liberalization. This is confirmed by a World Bank study that points out inefficiencies in developing countries as more costly to industries than tariff barriers.

In Indonesia, trade facilitation consists of innovations and reforms that have been launched over the years in response to demands for better services in relation to trade. One of these is the automation of customs procedures through an electronic data interchange system and an online payment system.

Just last month, we launched our pilot project for a National Single Window, which enables a single submission and processing of all data and information and single decision-making for customs clearance and release of cargos. I hope that Indonesia’s experience in this endeavour will lead to the development of an APEC Single Window.

Last year we issued an integrated economic reform package aimed at encouraging growth of the financial sector, improving the investment climate, accelerating infrastructures development and empowering micro and small and medium enterprises.  

We also passed a new investment law that provides greater legal certainty, transparency and accountability in the treatment of all investors. Under this new law, foreign investors are offered liberal incentives, including equal treatment with national investors.

At the same time, we are determined to carry out the most difficult of all endeavours at reform: the eradication of corruption. We know too well how corruption can wreak havoc on a nation’s economy. We are heartened, however, that our independent Commission for Corruption Eradication has scored a good number of successes in recent times.

But we have a long way to go. That is why our cooperation against corruption in the framework of APEC is so important to us. We in Indonesia are gratified that our cooperation against corruption that was launched at the APEC Economic Leaders Meeting in Santiago, Chile continues to be an important part of our agenda.

And that is why we are taking an active role in the global battle against corruption by hosting the Second Conference of State Parties to the UN Convention against Corruption in Bali at the end of this month. I hope that ABAC will take a keen interest in the proceedings of that Conference.

On another critical global issue, APEC cooperation on climate change has been robust: the APEC Economic Leaders Meeting in Sydney served as an important step towards the UN Conference held in Bali last December. It contributed significantly to the charting of the Bali Roadmap, which hopefully will lead to a post-Kyoto Protocol regime on climate stability.

Aside from climate change, there are a number of global issues related to human security with enormous economic impact, on which APEC needs to remain focused. These include the threat of contagious diseases that may break into epidemics or pandemics.

They also include the threat of terrorist attacks and their deadly impact on the economic life of entire societies. Indeed, we must be vigilant and strengthen our concrete cooperation to ensure security of trade in the APEC region.

And finally, of course, there is the need to intensify Ecotech, which is so necessary to bridge the socioeconomic gap between members. There is still a great deal of capacity-building to be done. Some of the APEC economies— the developing economies among us— still have so much catching-up to do before they can be competitive enough to really benefit from the liberalization of trade and investment in the APEC region.

In the efforts of APEC to address these issues and concerns, ABAC, as the voice of the private business communities in the APEC region, plays a key role.

We in government will, of course, do our part as policy makers, regulators and facilitators. But APEC is a grouping of economies and it is the people in their role as investors, producers, distributors and consumers of goods and services—rather than governments— who make up the largest part of these economies.

ABAC must serve as the advocate, counsel and rallying point of the peoples of the APEC region. In that role, it can do so much to create a new culture of business in the region.

And I think ABAC is especially called upon to play this role at a time when exciting developments are taking place in this part of the world. Centripetal forces are at work among the economies of East Asia and the Pacific.

ASEAN is transforming itself from a loose association into a Community. It took 40 years of gradual but steady development for ASEAN to reach a stage where it is ready to adopt a binding Charter that will give it legal personality and organizational cohesiveness.

An ASEAN Free Trade Area was already in place as early as 2002 but we want to do more than that: we want an ASEAN Community that is equipped not only with a Charter but also with a Blueprint that will develop ASEAN into a single production base with a free flow of goods, capital, services and human resources. Thus we have a detailed plan of how ASEAN will economically develop until 2015.

At the same time, with the free trade areas that ASEAN is building with its developed partners, we envision that by 2015 there will be an East Asia-wide free trade area that covers an aggregate market of 3.9 billion as it embraces such powerful economies as Japan, China, India, Korea and ASEAN with its total population of 500 million.

Thus ASEAN is deeply engaged not only in intra-ASEAN integration but also a much larger integration process involving the rest of East Asia and the Pacific Rim, and reaching out to Latin America and the Caribbean in the framework of FEALAC. As a result of intensive dialogue with partners in East Asia, we launched the East Asia Summit in Kuala Lumpur in 2006.

Today the East Asia Summit is still firming up its agenda, but in the ripeness of time there will be an East Asian community—spelled with a lower-case “c”—that has as its mainstay two of the largest and most dynamic economies in the world, China and India. This will be an East Asia bolstered at last by the long-awaited rapprochement between China and Japan and the ceaseless networking by an ASEAN that will then be fully integrated.  

As to the APEC Free Trade area that some economies proposed two years ago, our response is to draw wisdom from our experience in ASEAN. We say: Let us not rush. Let us go about it step by thoughtful step and we will in time reach our goal.  

By then there should be an APEC that is so much more dynamic as a result of the fusion of the corporate cultures of both East and West. By then it will be clear that we have stepped through the gate of the Pacific Century.

And I am sure that ABAC shares this vision. And I am also sure that by then, ABAC shall have played a major role in that grand process of integration. For at the end of the day, we in government can only formulate plans and contrive visions, but it is the private sector that can give concrete reality to government plans and provide living flesh to what we envision.

I thank you.