THE FUTURE OF MANUFACTURING INDUSTRIES IN INDONESIA FOR

FACING ASEAN ECONOMIC COMMUNTY

Asean Economic Community (AEC) in 2015 was the realization of a free

market in Southeast Asia that has been done gradually began ASEAN Summit in
Singapore in 1992. The purpose of the establishment of the ASEAN Economic
Community (AEC) to enhance economic stability in the ASEAN region, and is
expected to address the problems in the economic field between ASEAN
countries. MEA consequences of the agreement in the form of free flow of goods
to the ASEAN countries, the impact of the free flow of services, the impact of the
free flow of investment, the impact of the flow of skilled labor, and the impact of
the free flow of capital. These things can certainly result in positive or negative
for the Indonesian economy. Therefore, from the government side also performed
the strategies and measures that Indonesia is ready and able to take advantage of
the momentum of the MEA.

Indonesia is one country in the ASEAN Economic Community (AEC) or the

ASEAN Economic Community (AEC), which will unfold starting in late 2015.
MEA is the realization of a free market in Southeast Asia that has previously been
referred to in the Framework Agreement on Enhancing ASEAN Economic
Cooperation in 1992. At the meeting of the Heads of State of ASEAN (ASEAN
Summit) 5th in Singapore in 1992, is the Head of State announced the
establishment of an area free trade in the ASEAN (AFTA) within a period of 15
years. Later in development, accelerated to 2003, and accelerated again last into
2002.

MEA formation originated from an agreement ASEAN leaders in the Summit

(Summit) in December 1997 in Kuala Lumpur, Malaysia. This agreement aims to
improve the competitiveness of ASEAN as well as China and India could compete
to attract foreign investment. Foreign capital needed to boost employment and
welfare of the citizens of ASEAN. At that time, ASEAN launched the initiative of
the establishment of regional integration of ASEAN or the ASEAN community
through ASEAN Vision 2020 during the Second ASEAN Informal Summit. This
initiative was later embodied in the form of long-term roadmap called the Hanoi
Plan of Action that was agreed in 1998.

At the next summit Indonesia is one of the initiators of the establishment of

the AEC is in the Declaration of ASEAN Concord II in Bali on October 7, 2003
by which the ASEAN officials declared that the establishment of the AEC in
2015.The establishment of the ASEAN Community is part of ASEAN's efforts to
further strengthen ASEAN integration. There was also an attempt evolutif
ASEAN to adjust perspective in order to be more open in discussing domestic
problems that affect the region without leaving the main principles of ASEAN,
namely: mutual respect (Mutual Respect), no interference in domestic affairs
(Non-interfence) , consensus, dialog lists and consultation. ASEAN Community
consists of three pillars, including cooperation in the economic field, namely:
security community ASEAN (ASEAN Security Comunity / ASC), the ASEAN
Economic Community (ASEAN Economic Community / AEC) and the Socio-
Cultural Community ASEAN (ASEAN Socio-Cultural Community / ASCC).

Purpose of establishing the MEA to increase economic stability in the ASEAN

region, and is expected to overcome the problems in the economy among ASEAN
countries. For nearly two decades, ASEAN consists of only five countries -
Indonesia, Malaysia, Philippines, Singapore and Thailand - whose establishment
in 1967. The countries of Southeast Asia are incorporated in different times,
namely Brunei Darussalam (1984), Vietnam ( 1995), Laos and Myanmar (1997),
and Cambodia (1999).

The main characteristic feature of MEA is a single market and production

base; economic regions with high competitiveness; region with equitable
economic development; and a region fully integrated into the global economy.
The impact of the creation of MEA is the creation of a free market in the field of
capital, goods and services, and labor. The consequences of the agreement MEA
that impact the free flow of goods to the ASEAN countries, the impact of the free
flow of services, the impact of the free flow of investment, the impact of the flow
of skilled labor, and the impact of the free flow of capital.
of The character and impact of MEA mentioned above is actually no chance of
momentum that can be achieved MEA Indonesia. With the MEA Indonesia's
economy is expected to be better. One of them is the marketing of goods and
services from Indonesia can expand its reach to other ASEAN countries. Market
share in Indonesia is 250 million people. In the MEA, the ASEAN market share of
some 625 million people could be targeted by Indonesia. Thus, Indonesia has a
greater opportunity to tap into a wider market. Exports and imports can also be
done with a cheaper cost. Labor from other countries in ASEAN can be free to
work in Indonesia. In contrast, Indonesian workers (TKI) also can be free to work
in other countries in the ASEAN.

Other positive impacts that can expand the investor Indonesia investment
without any limitation of space among ASEAN member countries. Similarly, we
can attract investment from ASEAN investors-investors. The entrepreneurs will
be more creative because of the intense competition and the professionals will
further increase the level of skill, and professionalism owned.

However, besides the opportunity to look at the front of the eye, there are
obstacles facing the MEA that need our attention. Among the obstacles: first, the
quality of education remains low labor, in which up to February 2014 the number
of workers junior high school education or below, there were 76.4 million people
or about 64 percent of the total 118 million workers in Indonesia. Second, the
availability and quality of infrastructure is still lacking thus affecting the smooth
flow of goods and services. According to the Global Competitiveness Index (GCI)
in 2014, the quality of our infrastructure is still lagging behind compared to
countries of Singapore, Malaysia, Brunei Darussalam and Thailand. These three,
the industrial sector which is vulnerable because of dependence on imported raw
materials and semi-finished. Fourth, the limited supply of energy. Fifth, the
weakness of Indonesia facing import surges, and now imported Chinese products
have flooded Indonesia. If the barriers had not addressed the MEA feared it would
be a threat to Indonesia.

Towards the MEA which is in sight, the Indonesian government is expected to

prepare a strategic step in the labor sector, infrastructure sector, and industrial
sectors. In the face of the MEA, the Indonesian government prepared a policy
response that is associated with the National Industrial Development,
Infrastructure Development, Logistics Development, Investment Development
and Trade Development .In addition to the respective Ministry and the Institute
strives to anticipate the MEA with strategic measures.

Indonesia with the potential of natural resources and great human resources in
ASEAN still needs to be strengthened in the face of the ASEAN free market.
Given the other ASEAN countries such as Thailand and Malaysia have been very
aggressive to prepare themselves to take advantage of the ASEAN Economic
Community (AEC) in 2015.

The manufacturing company is the main pillar of industrial development in a

country. The development of manufacturing industry in a country can also be used
to see the development of national industry in the country. This development can
be seen both from the aspect of product quality and performance of the resulting
overall industry.
A research conducted in 2006 by an international institution on the prospects
of manufacturing industries in various countries show quite alarming results. Of
the 60 countries which are the object of research, the position of Indonesia's
manufacturing industry are bottom along with some Asian countries, such as
Vietnam. Research that examines aspects of the competitiveness of Indonesian
products manufacturing industry in the global market, putting it in a very low
position.
In the field of Industry, the Minister of Industry Saleh Husin also explained
the strategy that the Ministry of Industry facing MEA with offensive and
defensive strategies. Offensive strategy which shall include the preparation of
superior products. From mapping the Ministry of Industry, superior product in
question is the agro industry such as cocoa, rubber, palm oil, textiles and textile
products, leather footwear, furniture, food and minimum, fertilizers and
petrochemicals, automotive, machinery and equipment, as well as metal products,
iron, and steel. The defensive strategy is done through the preparation of
Indonesian National Standard for manufacturing products.
Explained the Minister of Industry, Saleh Husin, offensive strategy by building a
center of education and training industry.
"Implementation is done with regard to the strengthening of Small and Medium
Industries sector include incentives for SMEs through restructuring program,
machinery and equipment," said saleh in Jakarta, Monday (06/07/2015).
besides,he said, the company is also focusing on developing industrial
entrepreneurship through training new entrepreneurs and help start-up capital. As
for the defensive strategy, carried out with a concentration in the preparation of
Indonesian National Standard for manufacturing products. There is now
composed of 50 National Competence Indonesia (NCI) and the industrial sector
25 Professional Certification Institute (PCI) dan A Competency Test (ACT).

Progressively pursued additions 15 10 NCI PCI and industrial sectors each year,
preferably in the field of industrial priority.
The minister also stressed the development of small and medium industries which
are included in the program offensive. Which was commissioned by
memberifasilitas access to capital for SMEs through business credit, Community
Development Partnership Program (CSR), Venture Capital and Corporate Service
of Responsibility (CSR).
"According to BPS data, hinggatahun 2013, the number of business units reaching
3,4juta HPI unit danmenyerap 9.7 million workers. That number will be increased
again through the acceleration of the growth of entrepreneurship, "said Saleh.
The government also approached the industry that has the potential to contribute
to increased exports, for example the automotive industry. In mind, the auto
industry plans to export 50 ribusepeda motor to the Philippines. The Ministry of
Trade also encourages mebeluntuk further boost the export sector. In addition, the
fisheries sector is also providing optimism for increased exports of Indonesia.

From the aspect of employment, there is a tremendous opportunity for job seekers
as it can be a lot of available jobs with the various needs of its diverse
membership. In addition, access to go abroad in order to find the job easier even
could be without any particular obstacles. MEA also be a good opportunity for
entrepreneurs to find the best workers in accordance with the desired criteria. In
this case may bring the risk of ketenagakarejaan for Indonesia. In terms of
education and productivity Indonesia is still unable to compete with workers from
Malaysia, Singapore, and Thailand as well as the industrial foundation for
Indonesia alone makes Indonesia ranks fourth in ASEAN (Republika Online,
2013).

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