TNAG-1154-FCO40-1434-Visits-by-Members-of-Parliament-(MPs)-to-Hong-Kong-1982 — Page 78

THE INDUSTRY AND TRADE COMMITTEE

5

7 July 1982]

[Continued

towards the development of a viable regional economy and a region of stability and progress. Since that Summit, there has been some progress in various facets of ASEAN regional co-operation; in intra-ASEAN trade—some 8,529 items have been exchanged to- date under the ASEAN PTA (Preferential Trading Arrangement); industrial co- operation — it is planned to establish major ASEAN industrial projects in each of the Five Member States; as well as co-operation in banking, food supply and energy.

EC/ASEAN Co-operation Agreement

The first EC/ASEAN Foreign Ministers Meeting was held in Brussels in November 1978. This generated the idea of a co-operation agreement and at the second meeting of Foreign Ministers in Kuala Lumpur in March 1980 the EC/ASEAN Co-operation Agreement was signed. This five year agreement, which represents a significant milestone in EC/ASEAN relations, is similar in pattern to other co-operation agreements although it is the first which the Community has concluded with a third world regional group. It provides for a Joint Co-operation Committee to be set up to supervise and promote various activities envisaged in the agreement. The main objectives in the agreement are to strengthen commercial relations and to achieve economic co-operation in agreed fields.

Joint-Co-operation Committee

There have been two meetings of the Joint-Co-operation Committee, the first in Manila in November 1980 and the second in Brussels in October 1981. The Committee held wide- ranging discussions on trade co-operation. It noted with satisfaction the expansion of trade between the two regions and underlines the necessity of a balanced and diversified development of trade relations.

INDONESIA: MARKET AND ECONOMY

ANNEX B-I

1. Indonesia, with a population of 155 million (fifth largest in the world), has a rapidly growing economy based on the development of extensive and varied natural sources, including substantial oil and gas reserves, which provide the revenue for modernisation of the traditional agricultural sector and the development of new manufacturing industries. The manufacturing base is small but developing and activities such as secondary agricultural processing, textiles and garment manufacture still predominate. However, the Third Five Year Development Plan (Repelita III 1979-84) provides for an industrial growth rate of 11 per cent and an average GNP growth of 6.5 per cent. The 1982/83 budget provided for a substantial increase in development expenditure to sustain the momentum. World recession, however, has led to falling revenues from oil and gas exports and also a large decrease in non-oil exports all of which produced weakened balance of payments situation in 1981. Indeed the drop in non-oil exports is a factor which has led the Indonesian Government to introduce a counter-purchase policy for large Government contracts. The Government expects a BOP deficit in 1981/1982 although they consider that they should be able to accommodate this by calling on Indonesia's considerable foreign exchange reserves and by overseas borrowing against good credit. In 1981, GNP grew by 7 per cent in real terms and inflation was down to 7.1 per cent from 16 per cent in 1980.

2. Although not yet a large export market for UK goods and services, Indonesia is acknowledged to be a substantial developing market offering considerable potential to UK firms. During Lord Carrington's visit to Indonesia as the then Foreign Secretary, as part of his tour of ASEAN in January 1982, a £125 million ECGD backed export credit agreement for UK suppliers to the Balikpapan refinery extension was agreed. More recently, in May 1982, Balfour Beatty has announced the signing of an £80 million contract for part of the Mrica hydro power scheme which was supported by ATP funds for the electro-mechanical elements.

3. During 1980 UK trade relations with Indonesia received a serious setback when the EEC imposed quotas on the import of certain Indonesian made garments on behalf of the UK. The way for the resolution of the problem was paved by the establishment of the