Strengthening the Domestic Market or Searching Export Opportunities: A Dilemma Resulted From the Impact of ACFTA on Small and Medium Enterprises

RAHUTAMI, ANGELINA IKA and SUSILOWATI, MG. WESTRI KEKALIH (2011) Strengthening the Domestic Market or Searching Export Opportunities: A Dilemma Resulted From the Impact of ACFTA on Small and Medium Enterprises. China-USA Business Review, 10 (9). pp. 802-815. ISSN 1537-1514

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Abstract

The newest RTA ratified by Indonesia was ASEAN—China Free Trade Agreement (ACFTA). ACFTA is aimed to strengthen and enhance economic cooperation between ASEAN and China. One of ACFTA consequences is having more trades of goods and services flow to Indonesia from ASEAN countries and China. Among other countries, China has been a new “giant” for Indonesian trade. Trading relationship between Indonesia and China tends to increase year after year. Since 2005 until 2009, Indonesia had had a deficit trade balance to China. This condition indicates that China trade can expand and entry Indonesian market easily. Until now, invasion of cheap products from China has threatened many industries in Indonesia, as well as in Central Java. This condition has affected business situations, including Small and Medium Enterprises (SMEs). Based on this phenomenon, this study is aimed to analyze how Central Java deals with ACFTA challenges. The study methods were descriptive and qualitative analysis. Primary data was found through questionnaire and in-depth interview. The study results showed that Central Java had a deficit trade balance to China. This condition was not favorable because the imported commodities were equal to the competitive SMEs’ commodities. This condition threatened SMEs entrepreneurs. Moreover, the results of consumer perception showed that respondents preferred to choose the Chinese products rather than Indonesian because of quality, availability, attractive design and price. Furthermore, many SMEs entrepreneurs were faced to a new threat especially in supply chain, supply continuity, and price. The Chinese products’ penetration has decreased sales volume and profit of SMEs. Thus, this study results the appropriate strategies to cope with the ACFTA, which are strengthening access to domestic market, fixing supportive regional regulation, and not focusing yet on export orientation.

Item Type:	Article
Subjects:	300 Social Sciences > 330 Economics 300 Social Sciences > 330 Economics > Macroeconomics
Depositing User:	Ms MG. Westri Kekalih
Date Deposited:	24 Jan 2019 05:12
Last Modified:	11 Apr 2023 03:53
URI:	http://repository.unika.ac.id/id/eprint/17804

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