JAKARTA (November 26 2009): Indonesia plans to ask for a delay in a free-trade pact between China and the Association of Southeast Asian Nations (Asean) for certain products as local producers fear it may hurt their business, the industry minister said on Wednesday. China signed an initial free trade agreement with the 10 members of Asean in November 2002, and both sides had set 2010 as a deadline for a broader pact.

The major Asean economies include Indonesia, Singapore, Thailand and Malaysia. Under the agreement, import taxes on manufactured goods including textiles, footwear, and electronics will be scrapped. However, Indonesia wants a delay for provisions on manufactured goods including steel products, textiles, petrochemicals and electronics, M.S. Hidayat told reporters.

"Many producers of these products have asked for a review of the free-trade pact because they're not ready to open up their business," Hidayat said. "The government plans to negotiate with other Asean nations. The free-trade pact can start next year but for certain industries, it may be delayed or postponed," he said. The Indonesian Chamber of Commerce has urged the government to delay the FTA between Asean and China as manufacturers were worried that cheaper Chinese products will flood the local market.

Indonesia's trade deficit with China widened to $7.16 billion in 2008, from $1.29 billion in 2007, data from the state statistic agency, shows. Indonesia will submit the request internally before it will be discussed in an Asean-China meeting, Hidayat said without giving a timeframe. China-Asean bilateral trade is worth $231.1 billion, with two-way investment around $60 billion.

Copyright Reuters, 2009