Indonesian Export Performance and Competitiveness in the ASEAN-China FTA

The ASEAN-China Free Trade Agreement (ACFTA) is a regional trade agreement that attracts the most attention among various FTAs between ASEAN and third parties. This study aims to analyze the influence of ACFTA on export performance and the competitiveness of Indonesian exports. The study revealed that (i) ASEAN-China FTA increased the penetration of Indonesian export products in the Chinese market, marked by the increasing number of sectors in the category of rising stars and lagging opportunities from 19 sectors before ACFTA to 52 sectors after 2010, (ii) similarity trade index between ASEAN and China since 2011 decreased sharply from 43 to 14 in 2016 indicating the export profile between ASEAN and China is increasingly divergent (increasingly dissimilar), and (iii) high competition between Indonesian and China export consistently decreased measured in similarity trade index from 69 in 2011 to 58 in 2016. Consequently, Indonesia's export development potential is still open to ASEAN and China (specifically to the ASEAN market) because 38 sectors of export are in the lost opportunity category and almost half (42%) of these sectors posses competitiveness (RCA> 1)