Abstract: Indonesia is one of the fastest growing developing countries in Southeast Asia and has a bright future, as it is estimated to become the 10th largest economy in the world by 2020. In the year 1995, together with several ASEAN leaders, the then president of Indonesia signed the WTO Agreement in Geneva, Switzerland. By joining the WTO Agreement, Indonesia established common markets (free trade zone) with several other countries in its region and agreed to follow WTO principles. The first common market came into force 2 years later. Indonesia entered into the China – ASEAN Free Trade Area (CAFTA). The result was unsatisfactory. In the year 2012, it is noted that its balance of payments has a minus with the total amount of US$ 7 Billion in trading activity against China. What is the main problem behind this number? It is found that there are 11 industrial sectors which are most affected by the establishment of CAFTA. The industrial sectors are steel, textiles, jute, horticulture, machinery and equipment, electronics, furniture, toys, foods and beverages, and shoes. Further, it is found that Small and Medium Enterprises (SMEs) in each sector cannot compete with China’s products both at the local and global market because of lack of knowledge about standardization. Ultimately, if there is no further solution, these sectors are going to collapse. In order to compete with foreign products in FTA, SMEs in Indonesia have to adopt and establish ISO as a guideline in their business activities so that they are able to exist for supplying both the local market and the global market, especially in the CAFTA region. This can be accomplished by several kinds of strategy and of course with the support of the government of Indonesia. There are several steps suggested, such as identifying the availability of international standards for 11 industrial sectors, accelerating identical adoption of ISO to Indonesian standards (SNI), analysis of industrial competences, analysis of conformity assessment bodies’ competences, analysis of national differences, market operation - technical regulation, and educating consumers as the final users.
Keywords: CAFTA; ISO International Standards; Dismantling Trade Barriers; Indonesian SMEs.
Title: Roles of International Standards in Indonesian Small and Medium Enterprises (SMEs) in the Context of CHINA-ASEAN Free Trade Area (CAFTA)
Author: Sunny O. Temile (Nigeria), Dadang Prasetyo Jatmiko (Indonesia)
International Journal of Management and Commerce Innovations
ISSN 2348-7585 (Online)
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