Abstract

This study examines the extent and nature of Indonesia’s SMEs’ participation in ASEAN economic integration based on a survey of 200 SMEs in the manufacturing sector. The survey shows that 79 per cent of respondents demonstrated awareness of the AEC. However, only 18 per cent of them were aware of the ASEAN Blueprint for SMEs. We found that 39 per cent of respondents think the AEC will increase domestic sales and the other 15 per cent believed it will decrease them. In terms of exports, 39 per cent of respondents expected their exports to increase in contrast to the 3 per cent who believed it they will decrease. Concerning their profits, 45 per cent of the respondents felt optimistic that their profits will increase, in contrast to the 13 per cent who felt they will decline. A large proportion of respondents were of the opinion that the AEC will affect them through: lower import duties (42 per cent of respondents); lower export tariffs (47 per cent of respondents); better custom procedures (42 per cent of respondents); better standard regulations (49.5 per cent of respondents); and improved recognition of professional qualifications (46 per cent of respondents). Our survey found a larger percentage of firms that did not utilize FTA forms (63 per cent) even though they were actively exporting, predominantly because of the lack of knowledge regarding their use. The Probit model showed a significant correlation between FTA use and export activities. There is also a significant positive relationship between FTA use and the probability of import. Furthermore, larger firms are more likely to utilize FTA forms.

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Additional Information

ISSN
2339-5206
Print ISSN
2339-5095
Pages
pp. 77-117
Launched on MUSE
2017-05-05
Open Access
No
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