INTERCULTURAL BUSINESS

COMMUNICATION

Midterm Test Assignment

By:

Rian Nur Prasetya (120901089)

Chapter I

INTRODUCTION

The ASEAN Free Trade Area (AFTA)

The ASEAN Free Trade Area (AFTA) has now been virtually established. ASEAN
Member Countries have made significant progress in the lowering of intra-regional
tariffs through the Common Effective Preferential Tariff (CEPT) Scheme for AFTA.
More than 99 percent of the products in the CEPT Inclusion List (IL) of ASEAN-6,
comprising Brunei Darussalam, Indonesia, Malaysia, the Philippines, Singapore and
Thailand, have been brought down to the 0-5 percent tariff range.

ASEANs newer members, namely Cambodia, Laos, Myanmar and Viet Nam,
are not far behind in the implementation of their CEPT commitments with almost 80
percent of their products having been moved into their respective CEPT ILS. Of
these items, about 66 percent already have tariffs within the 0-5 percent tariff band.
Viet Nam has until 2006 to bring down tariff of products in the Inclusion List to no
more than 5 percent duties, Laos and Myanmar in 2008 and Cambodia in 2010.

Following the signing of the Protocol to Amend the CEPT-AFTA Agreement for
the Elimination of Import Duties on 30 January 2003, ASEAN-6 has committed to
eliminate tariffs on 60 percent of their products in the IL by the year 2003. As of this
date, tariffs on 64.12 percent of the products in the IL of ASEAN-6 have been
eliminated. The average tariff for ASEAN-6 under the CEPT Scheme is now down to
1.51 percent from 12.76 percent when the tariff cutting exercise started in 1993.

The implementation of the CEPT-AFTA Scheme was significantly boosted in

January 2004 when Malaysia announced its tariff reduction for completely built up
(CBUs) and completely knocked down (CKDs) automotive units to gradually meet its
CEPT commitment one year earlier than schedule. Malaysia has previously been
allowed to defer the transfer of 218 tariff lines of CBUs and CKDs until 1 January
2005.

The purpose of AFTA

Make the ASEAN as a production place which compete in the ASEAN

commerce, so the products that made could be competitive.

Attract more Foreign Direct Investment (FDI)
Improving the trade activities between the members of ASEAN (Intra-ASEAN
Trade)

In the growth of the members of ASEAN in continuously, such as Vietnam (1995),

Laos, Myanmar (1997) and Cambodia (1999). But there are some Countries that
signing bilateral contract such as China, Japan, South Korea, India, Australia and
New Zealand.

Chapter II

The Purpose of this article

In this chapter, the writer will tell you the purpose of this article, why the
writer write this article? Is it important? This is the explanation of the advantages
and disadvantages of AFTA for Indonesia that you should know. Why Indonesian
should supervising the development of AFTA and how to handle it in would be
explained the next chapter. Now, the writer is explaining from the advantages and
disadvantages.
Some of the advantages:

The marketing of goods to ASEAN would be larger and will increase the

income of Indonesia.
The costs of production would be cheaper, then Indonesia will reap its huge

import products since on average.

Customer choose would be varied.
Cooperation in running a business keeps open by cooperating with the ASEAN
member states.

Viewed from the position of Indonesia which is still classified as developing

countries, Indonesia has disadvantages in many indicators.
Some of the disadvantages:

Competition indicators. According to the global competitive report (18-23

2012), Indonesia was ranked in #44. Remain in economic ASEAN countries,

such as Thailand (38), Malaysia (26), and Singapore (3).

Human resources indicator. According to human development index 2011
issued by the UNDP (United Nations Development Program), said that
Indonesia was in the order 124 from 187 countries considered (as level as

Honduras, Kiribati and South Africa).

Performance indicator, technology indicator in middle and high class,
indicator of a comparison of an average of political system, system of
government with the GDP and structure in it.

If we read the advantages and disadvantages above, we as Indonesian people

should be aware for AFTA and for the future economical of Indonesia. Where will we
bring Indonesia for tomorrow?

Chapter III

Can we handle it? Can we survive at it?

Personally, all we can do are to develop the basic competences that we have,
as worker in a company, you have to improve Skill-Knowledge-Attitude (SKA).
Therefore we have also increase our Speed-Stamina-Accuracy (SSA). Even you were
a labor, this thing is very important. Vietnam has cheaper labor than Indonesia.
Philippine has excess in the service sector. Personal development is also important
to makes us competitive.
If you were an industrial person in middle and lower grade, there are three things
that you have to prepare, such as Human resources, product quality, and legality of
your product. Therefore, as an entrepreneur, there are also three aspects that can
be used, there are:

Chance: Observe market which has not been completed from others

producers.
Differentiate: Make a comparison for products, so consumer would be easier

to choose the product they want.

Focus: Not every chance must be caught, the most important thing is we can
win the competition, and the key is just focus.

As an entrepreneur we have minimize trial and error. You have to see market and
the future.
From all the things that explained, the keywords that make us survive in the next
two years are continuous improvement, mental improvement and nationalism.

References:

http://sastrasipilindonesia.wordpress.com/2014/01/24/seputar-afta-aseanfree-trade-area-tahun-2015/

http://www.asean.org/communities/asean-economic-

community/category/asean-free-trade-area-afta-council
The Writer Opinion