JOURNAL OF CRITICAL REVIEWS

ISSN- 2394-5125 VOL 7, ISSUE 16, 2020

THE READINESS OF WEST GOVERNMENT IN FACING ASEAN ECONOMIC COMMUNITY

Deswita Rosra1, An An Chandrawulan2

1Student of Law Doctor, Padjadjaran University, , West , 45363, 2Lecturer Faculty of Law, Padjadjaran University, Bandung, , 45363, Indonesia. [email protected], [email protected]

Received: 16 March 2020 Revised and Accepted: 19 June 2020

ABSTRACT: The purpose of this paper is to find out the readiness of Government in facing ASEAN Economic Community, the leading sectors or potentials from West Sumatra are the proponent factors for their readiness. This research is using normative law method, with secondary data which consist of primary law, secondary law, and tertiary law materials along with data collecting by studying documents and then analyzing the data qualitatively. The research’s result shows that the main target of the purpose of ASEAN Economic Community is to push the efficiency and economic competitiveness in the region. In order to achieve these two targets, it is important to spot on the competitiveness of each country or region, moreover in Indonesia and particularly in West Sumatra, to have the leading sectors and potentials for free market in ASEAN Economic Community. City or Governments have to put high interests and set the priority for the leading sectors in order to be able to compete, because the success of Indonesia in taking the opportunity of ASEAN Economic Community is determined by the ability and the competitiveness of each region.

KEYWORDS: Readiness; Government; Facing; AEC

I. INTRODUCTION It is the new beginning of step for the countries in ASEAN when the free-trade was starting conducted on January 1, 2010 and China joined later in AC-AFTA (ASEAN China Free Trade Agreement). This is one of the ways to encourage the economy of trade member countries, especially the economy of developed countries such as Indonesia. The free trade is one possibility that can be grabbed by Indonesia to exploit some of their industrial products to other free trade member countries. To exploit the industrial products, the quantity and quality of the products must be equal. If not so, the Indonesian products will be lost in the competition from other member countries. The least is Indonesian products must be on a par with other member countries’. Beside facing AC-FTA which has been agreed in ASEAN cooperation expected to be beneficial for both sides, Indonesia is now facing ASEAN Economic Community (AEC) free trade which was enforced by the end of December 2015 and became the new era in sensationalizing and integrating ASEAN economy. ASEAN has formed cooperation with the countries and international organizations in the world, also opened the diplomatic relation with ASEAN countries, which has 10 member countries in the community. There are three pondations (3 ASEAN communities). One of the ASEAN communities is Economy Community. In the blueprint of ASEAN community, it is giving an encouragement to reach the ASEAN economic society. To face this, Indonesian government has released Presidential Instruction No. 11 of 2011 on The Implementation of Blueprint Commitment ASEAN Economic Community[1]. Through ASEAN Economic Community, it is expected that ASEAN becomes the basic for production and shared market and also to make ASEAN become a competitive and stronger area which is able to compete to face the strength of regional economy of other regions, able to cut the gaps in economy and bring the integration of ASEAN countries to global economy [2].

685

JOURNAL OF CRITICAL REVIEWS

ISSN- 2394-5125 VOL 7, ISSUE 16, 2020

Indonesia, as one of the member of ASEAN, keeps the commitment to realizing ASEAN community through AEC, which are needed to economy growth among ASEAN countries and push the efficiency and competitiveness in ASEAN regions. Indonesia will not be a passive side in AEC and will not let to be only a market target. Indonesia has to be an important part in the regional and global production chain. The success of Indonesia in facing the opportunity of AEC is determined by the accumulation of ability and competitiveness from each regency. It is applied vice versa that the success of the regencies to get the benefit from ASEAN economy integration will be determined from their competitiveness. West Sumatra may take this as a big opportunity with good preparation and enhancement because it has many potentials, natural and non- natural. West Sumatra has the leading sectors which are able to increase the economy and welfare of its societies. Some of the sectors which are liberated trough AEC are the sectors prioritized to be developed and implemented, primarily in the current of goods, services, investment, stocks, and skilled workforce. In skilled workforce current, some of the priority sectors are doctors, expert doctors, midwifes, nurses, architects, accountants, tourism and survey staffs. One thing to be paid attention to in the implementation of ASEAN Economic Community free trade is the readiness of Indonesian government in general and West Sumatra government in specific to anticipate the positive and negative impact to industrial and trading field. The positive impact is the creation of boarder international market, meanwhile the negative impact can bee observed through the emergence of international market with more competitive, the competition between domestic and foreign entrepreneurs. There will be more impacts to be anticipated by West Sumatra government, so that it can avoid the harm to national and regional economic of the country. Based on the description above, the problem in this paper is limited to how is the readiness of the government of West Sumatra in dealing with the ASEAN Economic Community (AEC)? II. LITERATURE REVIEW The initiative to form ASEAN integration has actually emerged since 1997 at the time of the ASEAN Summit in . The leaders of the countries participating in the Summit agreed to transform a stable ASEAN region for economic equality and high competitiveness. In the 2003 ASEAN Summit which took place in , the leaders of the countries declared the so-called ASEAN Concord II for 2020. ASEAN Concord, of better know as Bali Concord II, contained an agreement on the existence of the ASEAN Economic Community (AEC) signed by 19 member countries refers to the ASEAN vision in 2020. The vision set forth in Bali Concord II contains rules for all regional organizations to maintain regional security and political, economic, and social cooperation [3]. Implementation of Bali Concord II was originally due to be implemented in 2020. In August 2006, at the 38th meeting of ASEAN Economic Ministers in Kuala Lumpur, , participants agreed to draft the rules of implementation. The Blue print is accelerating the formation of AEC and identifying its characteristics and elements in 2015. In January 207 during the 12th ASEAN Summit, participants agreed to accelerate AEC in 2015. by transforming the ASEAN region into an area where there is a free flow goods, services, investment, and skilled labor and freer flow of capital. As a legal basis for ASEAN countries, the ASEAN Charter was drafted, for Indonesia to ratify the crater with Law No. 38 of 2008. So, in 2016 ASEAN Economic Community would be formally and effectively applied to all ASEAN countries that have agreed to the ASEAN Charter [4]. ASEAN countries proclaim the formation of the ASEAN Community. The ASEAN Community consist of three pillars [5]: ASEAN Security Community (ASC) This pillar aims to strengthen regional security and stability for development, advance political development through strengthening democratic principles, increase mutual understanding and trust between ASEAN member countries and as an instrument for Indonesia to project ideas and initiative internationally. ASEAN Economic Community (AEC) This pillar aims to improve the competitiveness and prosperity of ASEAN through the integration of the ASEAN economy.

686

JOURNAL OF CRITICAL REVIEWS

ISSN- 2394-5125 VOL 7, ISSUE 16, 2020

ASEAN Sociocultural Community (ASCC) This pillar aims to promote a society-oriented ASEAN, through the participation of all components of society in the process of ASEAN integration and the development of the ASEAN community, fostering ASEAN people who care for and share one another to strengthen justice, solidarity, partnerships, and a sense of community together with ASEAN. These three pillars support the ASEAN community into a new paradigm that will move ASEAN cooperation towards a new community and identity that is more remembering. In the scheme of the ASEAN Economic Community (AEC), it has officially been in force starting December 31, 2015 or early 2016. Indonesia in general and West Sumatra in particular must move quickly to optimize the AEC, because this is not a free battle arena or the competition between ASEAN countries, but it is a collaboration of ASEAN countries as stated in the main mission of AEC. One of the main points in AEC scheme is the agreement towards a single market and production bases with core elements underlying the AEC to be developed and implemented in member countries. However, there is another important point that has been overlooked is the ASEAN road-map to work together to strengthen regional competitiveness [6]. Competitiveness is the main key to win the competition in the global market, not only in the ASEAN Economic Community. For Indonesia, especially West Sumatra, competitiveness is also a major problem where Indonesia must improve itself to face AEC and must prepare regional competitiveness from various aspects. The competition requires qualified skills to be able to compete, because the competition is not only among fellow Indonesian citizens, but we have to compete freely with other Citizen in the ASEAN region. To improve this, what is really needed is the role of the government to improve domestic human resources which are located in the world of education, both formal and non-formal. The government also needs to reform to improve regional potentials by continuing to socialize the implementation of AEC so that the local government apparatus, business actors, and the community or stakeholders understand AEC agreement, where we must prepare and make every effort continuously to get the maximum benefit. III. METHODOLOGY The method used in this research is the normative legal approach method. It means a method used in legal research is conducted by examining existing library materials[7] and focuses on legal theory, principles of law and systematic of law. Using secondary data means that data is obtained through literature study, which consists of books and laws. Secondary data consists of:

1. Primary Legal Material is an official legal material that binds or makes people obey the law, such as laws and judges' decisions. In this article, the Act, Presidential Instruction and ASEAN Charter are used as the main material.

2. Secondary Legal Material is legal material that is not binding but explains primary legal material which is the result of the processed opinions or thoughts of experts or experts who study a particular field specifically that will provide clues to where researchers will lead. Secondary materials are such as books scientific journals, newspaper, magazines, and the internet.

3. Tertiary Law Material is the material that supports primary and secondary legal materials, such as legal dictionaries and encyclopedias. Data collection techniques are used with document studies or literature studies and qualitative data analysis. Qualitative data analysis means grouping data based on the aspects studied, without using numbers but using the laws and regulations studied. IV. RESULTS AND FINDINGS The country of Indonesia is a country that has great prospects, because Indonesia is an ASEAN country that has a lot of natural resource potential, biodiversity, and a very strategic location. According to Global Mc Kinsey estimates that Indonesia is number 7 in the world in 2030, defeating Germany and the United Kingdom. Even though Indonesia has come under pressure from various circle, Indonesia still sees a very positive prospect, this

687

JOURNAL OF CRITICAL REVIEWS

ISSN- 2394-5125 VOL 7, ISSUE 16, 2020 can be seen from the large investment commitment to Indonesia if ASEAN Economic Community is implemented. The readiness of ASEAN countries in implementing AEC will have varied impacts, because it depends on the readiness of each country, because the countries in the Southeast Asian region have different potentials and opportunities. Indonesia is till optimistic about its Indonesian economy going forward, even though Indonesia is still facing fundamental problems in the economic field, especially from the point of national competitiveness, the country of Indonesia is an archipelagic country consisting of many regions, both developed and disadvantaged regions. The regions’ economic conditions are not the same with the center regions where the rate of economic growth is always increasing. However, some regions with the pace of investors have begun to play their role, by establishing companies in the regions or by investing in the regions. Based on the WEF (World Economic Forum) survey, Indonesia’s 2014 competitiveness ranks 34th in the world. In the ASEAN countries, Indonesia is under Singapore (2), Malaysia (20), Thailand (31) and slightly above Philippine (52) and Vietnam (68). According to WEF, there are 6 main problems that remain as obstacles for Indonesia in increasing its competitiveness, they are corruption, access to finance, inflation, bureaucracy and inefficient governance, weak infrastructure support, and policy instability[8]. Based on this, it is a concern for Indonesia to increase the competitiveness, especially for each region that will support Indonesia’s success in facing AEC. Besides the government is also preparing steps to deal with free trade both with AC-FTA and AEC including preparing the resilience and competitiveness of national industries, increasing the ability to love national products better, safeguarded for all protection instruments, and the application of early warning system [9]. In realizing efficient and economic competitiveness, there are four things to be considered [10]:

1. Creating a free market flow both the flow of goods, services, labor, capital, and investment; 2. Making ASEAN highly competitive in economic aspects; 3. Making ASEAN a region with equitable economic development on the basis of the development of small and medium enterprises; 4. Realizing integration in the Southeast Asian region. In terms of improving the potential, West Sumatra is at an average level, similar to Indonesia’s position competing among ASEAN countries. But nationally, Indonesia has declared its full readiness to face AEC, which is demonstrated through Indonesia’s positive commitment in each ASEAN conference. Before 2015 AEC issue, the people of West Sumatra had long integrated their economies with a number of ASEAN countries, especially with Malaysia and Singapore, such as the who are famous for their culture association who had migrated to Malaysia and Singapore for centuries to develop economic life by trading, bringing along customs and culture, including culinary culture that has lasted until now. Even the Minang nomads have become residents of Malaysia or Malaysia citizens, who have been carried on for generations. In addition, West Sumatra's readiness has begun by integrating a broader economy, marked by airports in the city of , West Sumatra opening direct flights with Malaysia (in 1991), after which was followed. The existence of the Growth Triangle collaboration in ASEAN, known as the Indonesia-Malaysia Growth Triangle (IMS-GT) and the Indonesia-Malaysia-Thailand Growth Triangle (IMT-GT) which has been carried out since the mid-1990s. The Provincial Government together with the regional KADIN encourage direct cooperation in the business and investment fields, with joint ventures between business actors from both parties, such as the Development of Padang Industrial Park (PIP) between Johor Corporation and the provincial and private governments and other several cooperative efforts in the plantation and forestry sectors [11]. Sectors that support the economy of West Sumatra must also receive attention from the government, because these sectors or potentials are supporting factors in the region's readiness. There are three sectors that could become the leading or the mainstay of West Sumatra to enter the MEA free market [12]: The Tourism Sectors The tourism sector is the future potential of West Sumatra, because this area has a rich cultural and natural landscape, one of the best in Indonesia, not inferior to Bali, and West Java. So far, the tourism

688

JOURNAL OF CRITICAL REVIEWS

ISSN- 2394-5125 VOL 7, ISSUE 16, 2020 sector has developed quite well and will continue to develop if the government together with tourism businesses are able to do business and provide optimal support. So far, of the around 40 thousand foreign tourists who come to West Sumatra every year, more than 60% come from Malaysia. In utilizing AEC opportunities in the future, West Sumatra must be able to make Malaysia and Singapore not only as a source of tourists, but must be an entry point for tourists from other countries to the West Sumatra region. If West Sumatra is able to develop the tourism sector well, it is not impossible the West Sumatra area will become a major tourist destination in Indonesia that is able to compete with Bali. Tourist attractions that attract tourists in West Sumatra include fun bikes through the , Anai Valley with waterfalls and natural scenery as well as rail transportation, ancient train locomotive tours and old train cars, Sihanok canyon, Tri Arga, Japanese canyons and caves, with 44 winding courses (meandered) and the paragliding, the Mentawai islands which are the most beautiful surfing places in the world after Hawaii and Tahiti, and Mandeh tours[13]. With the concept and packaging that is creative and good, will encourage the increasing of tourism visits to Indonesia in general and West Sumatra in particular and also bring in foreign exchange for the country, we can already imagine how much benefit West Sumatra will get from the AEC. The Creative Economy Sectors The creative economy sector in the culinary, fashion and small-middle enterprises (UKM) sector. In the culinary and fashion field, West Sumatra already has a special name in Malaysia and Singapore. In the development of these two fields, mainly due to the creativity of the community of entrepreneurs themselves, culinary business and Minang fashion has gained a place in Malaysian society in particular. In the Padang restaurant business (Minang restaurant) and the Muslim clothing business (Muslim clothes and headscarves), business people from West Sumatra have long utilized the Malaysian market. In the future, the brave government must further encourage the creative economy sector to increasingly enter the ASEAN market, especially Malaysia. In the field of UMKM (Micro, Small and Medium Enterprises) which has indeed been tested and proven as the business group that absorbs the most jobs, is creative and very quickly adjusts to economic and political policy changes. MSMEs are also recognized as a primary and secondary source of income for many households in Indonesia. In the event of a crisis for Indonesia (in 1998) MSMEs were able to survive and be a savior of the Indonesian economy, then MSMEs were able to realize economic growth better even during a crisis. At the time of the AEC implementation, policies towards MSMEs need to be improved. It could be the best strategy to deal with AEC, because it is able to absorb a low-educated workforce, as an expansion for the products they have and SMEs as well as a pillar (backbone) of the industry in country. The Labors (Human Resource and Education) Sectors How to make Malaysia and ASEAN countries generally a skilled and professional labor market from West Sumatra and vice versa. West Sumatra has many universities that can attract students from ASEAN countries to study in the area of West Sumatra. AEC will open up labor market opportunities among ASEAN countries. West Sumatra has schools and universities as well as training centers to produce skilled and trained workforce to fill these opportunities, especially for professional fields that began to open in the 2015 AEC such as doctors, expert doctors, nurses and so on. Faculty of Medicine is one of the best in Indonesia and West Sumatra also has around 50 Schools of Nursing and Midwifery that can be upgraded. These school and university graduates can fill the opportunities of skilled and professional manpower in ASEAN countries in the future. Opportunities that must be worked on and utilized to face the 2015 AEC certainly require efforts and cooperation for all parties related to the Provincial Government Local Government, Higher Education, Business World and other communities, which is no less important is to build a common awareness of the whole community how important the AEC is for developing the economy and welfare of the people of West Sumatra. The implementation of AEC for West Sumatra must take every important step immediately, one needs to soon establish an ASEAN Center to conduct various studies as well as formulate the strategies and policies needed to deal with the AEC so that the regions and people of West Sumatra can take optimal benefits from regional

689

JOURNAL OF CRITICAL REVIEWS

ISSN- 2394-5125 VOL 7, ISSUE 16, 2020 economic integration. The initiative to establish the ASEAN Center can be done immediately by the Provincial Government together with Universities and Regional Chamber of Commerce[14]. The Government of West Sumatra is expected to use the opportunity well and get the benefit, because West Sumatra has various characteristics such as tourism (outdoor sports, culinary, textile or embroidery, woven) and investment opportunities. For this reason, the West Sumatra region must prepare and conduct business continuously so that it gets the maximum opportunity and benefit. Related to this matter, which is of concern to the government and the needs to be improved for the West Sumatra region is the improvement of infrastructure, tourist attractions and clean public facilities, with a social culture that is full of order, tolerance and security as well as adequate human resources needed in the sense of being educated and possessing skills which can be relied upon. If these opportunities are optimized, it will open up opportunities for West Sumatra to emerge as the winner of the ASEAN Economic Community. V. CONCLUSION ASEAN countries have enormous natural resource potential, biodiversity, tropical climate and a very strategic location in the world geo-economic and geo-political map. It is not surprising if ASEAN is predicted to become an increasingly important region in the future. With the 2015 AEC, it is hoped that ASEAN will become a common production base and market for countries in the Southeast Asian region. The existence of the ASEAN Community is essentially to improve welfare, reduce economic and social disparities between ASEAN countries. Indonesia, one of the ASEAN countries, needs to make excellence and comparability in each region, because Indonesia's success in facing the AEC is largely determined by the competitiveness of each region. Indonesia's readiness in general and the West Sumatra region in particular immediately comes from the self-correction, with the role of the government to increase tourism visits, enhance the creative economy with MSMEs (Micro, Small and Medium Enterprises) and increase domestic human resources, because in the future competition to get jobs will be more competitive, special skills are needed. The great opportunity can be exploited by West Sumatra in AEC, with the efforts and hard work from all parties involved: the Regional Government, Higher Education, Business World and other components of society to be able to create conditions and competitiveness, especially in the superior sectors that regionally owned. Likewise, to obtain this opportunity is carried out with a variety of competitiveness factors that must be continually improved both in the infrastructure sector and in terms of bureaucratic policies and services and provide incentives to encourage investment and support the business world. For the West Sumatra region in welcoming the entry into force of the ASEAN Economic Community, it is necessary to have a common view and coordination on the importance of tourism, investment and trade, so that the AEC can be seen as regional economic integration, as an opportunity to improve the economy and welfare of the people of the West Sumatra region. VI. REFERENCES [1] Director General of ASEAN Cooperation, ‘ASEAN at a Glance 22nd Edition’, : Ministry of Foreign Affairs, 2017, p. 11. [2] Gusman, I., ‘West Sumatra in Facing AEC’, Padang Ekspres, June 16, 2015, page 4 [3] Adolf, H., ‘International Economic Law’, Keni Media, Bandung, 2011, p. 64. [4] Rafiqi, D., ‘AEC, How are you, Indonesia?’ Padang Ekspres, June 16, 2015, page 4 [5] Bank Indonesia, ‘ASEAN Economic Community (AEC) 2015: Strengthening ASEAN Synergy in the Middle of Global Competition’, PT Elex Media Komputindo, Jakarta, 2008, p. 15. [6] AEC Should Be A Collaborative Event’, Padang Ekspres, January 2, 2016, page 2 [7] Soekanto, S. and Mamudji, S., 2009, ‘Normative Legal Research A Brief Review, 11th Printing’, PT Raja Grafindo Persada, Jakarta, pp. 13-14 [8] Gusman, I., ‘West Sumatra in Facing AEC’, Padang Ekspres, June 16, 2015, page 4 [9] ACFTA Mutually Beneficial’, Padang Ekspres, April 25, 2015, page 3 [10] Depitriadi, ‘Regional Readiness for AEC 2015’, Padang Ekspres, April 15, 2015, page 4 [11] Gusman, I., ‘West Sumatra in Facing AEC’, Padang Ekspres, June 16, 2015, page 4 [12] Gusman, I., ‘West Sumatra in Facing AEC’, Padang Ekspres, June 16, 2015, page 4

690

JOURNAL OF CRITICAL REVIEWS

ISSN- 2394-5125 VOL 7, ISSUE 16, 2020

[13] Anonymous, ‘ASEAN Community Formation Paper and the Role of West Sumatra, 2015 ASEAN Community Socialization and Workshop on Legal Issues in ASEAN for Law Lecturers in Sumatra., Directorate General of ASEAN Cooperation of the Ministry of Foreign Affairs of the Republic of Indonesia, Padang, September 5, 2015 [14] Gusman, I., ‘West Sumatra in Facing AEC’, Padang Ekspres, June 16, 2015, page 4

691