Agreement on ASEAN Services Trade Opens Investment Opportunities

Agreement on ASEAN Services Trade Opens Investment Opportunities

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The ASEAN Economic Ministers are meeting again to discuss priority work programs which have been launched in one year at the 50th ASEAN Economic Ministers meeting (AEM Meetings) which took place on August 28 to September 1, 2018 in Singapore.

One of the important issues of concern in the discussion of cooperation in the framework of ASEAN economic integration is services trade.

The Ministers have signed the Protocol to Implement the 10th Package of the 10th ASEAN Framework Agreement on Services (AFAS), or 10th AFAS Package, which is the last package of the ASEAN agreement on trade in services since the first AFAS Package came into force in 1996.

At the 10th AFAS Package, all ASEAN member countries gave an increase in commitment to approximately 15 service subsectors, from the previous 97 subsectors at the 9th AFAS Package.

In this case, Indonesia is committed to 15 sub-sectors covered by business services; telecommunications services; distribution services; environmental services; health services and transportation services.

“Through the 10th AFAS Protocol, ASEAN member countries can take advantage of cooperation in trade in services and provide opportunities to increase trade in services for Indonesia in the ASEAN member markets,” Trade Minister Enggartiasto Lukita said in an official statement in Jakarta on Friday (8/31/2018).

In addition, it is expected that investment from ASEAN member countries to Indonesia is projected to increase so as to encourage the development of the service industry and Indonesia’s economic growth.

“Likewise, Indonesia’s investment opportunities in ASEAN member countries can increase so that it can strengthen the profile of Indonesia’s service business sector in the global economy,” he explained.

With the enactment of 10th AFAS Package, the commitment to foreign capital ownership must be in accordance with the provisions stipulated in Government Regulation (PP) No. 44 Year 2016 on the Negative Investment List (DNI) and other domestic regulations which require the amount of foreign capital ownership of 49-70 percent.

However specifically for certain sectors such as tourism services (hotels and resorts) and recreation and sports services (golf courses and other facilities, tourist resorts) Indonesia opens investment opportunities with 100 percent foreign capital ownership especially for Eastern Indonesia; Kalimantan, Bangka Belitung, Bengkulu, Jambi, Sulawesi and East Nusa Tenggara (NTT).

This aims to attract investment in order to develop the tourism sector which is a priority tourism destination. He continued the implementation of the 10th AFAS Package will provide an opportunity to increase trade in Indonesian exports and imports of services in ASEAN.

“Investment from ASEAN member countries to Indonesia is expected to increase and is expected to encourage the development of the service industry and Indonesia’s economic growth,” he said.

As such, investment opportunities from Indonesia to ASEAN member countries can increase so as to strengthen the profile of the service business sector including the influence on the global economy. In addition, there will be technology transfer, the best professional staff from ASEAN investors to Indonesia and the availability of various service products for consumers, both end consumers and producers.

In addition, the ministers have also agreed on an ASEAN Agreement on Electronic Commerce and are ready to sign it on the sidelines of the ASEAN Summit in November 2018.

The electronic trade agreement aims to facilitate cross-border electronic trade transactions in the ASEAN region, create a conducive environment in electronic commerce, and enhance cooperation between ASEAN member countries to create inclusive growth and reduce inequality in ASEAN.

In this annual meeting the ministers also met with the ASEAN Business Advisory Council (ABAC) as a form of collaborative support between the government and the private sector to work together in order to realize the implementation of the ASEAN Economic Community (AEC) 2025 through a process of monitoring and evaluation.

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