To support international trade, the International Chamber of Commerce (ICC) has been established worldwide. In fact, Indonesia has been a member of this institution since 1955. The ICC has played a role in helping national companies develop business in other countries. How does ICC work in Indonesia? The follow-ing is an interview with Ester Meryana, a journalist from Bloomberg Businessweek Indonesia, with the Chairman of ICC – Indonesia Noke Kiroyan, in Jakarta, Monday (20/4).
How did the ICC get started in Indonesia?
Actually, the ICC has been around for quite a while. Founded in Paris in 1919, after World War 1, a war that resulted in the destruction of the world economy. At that time only Europe was developing. Most countries in Asia and Africa were still colonized. Departing from this condition, several business figures gathered and founded what became the ICC.
Simply put, the ICC represents the voice of business internationally. For example, within the G – 20 group of countries there is an advisory body from the ICC. We also work closely with the United Nations (UN). There is a special representative from us.
Regarding its presence in Indonesia, initiatives that only come from the outside is impossible. There must be parties in the country concerned who consider it important to establish this institution. Indonesia has been registered as a member since 1955. However, with the presence of the Indonesian Chamber of Commerce and Industry (Kadin) and all kinds, the chairman of the ICC has always been the chairman of the Indonesian Chamber of Commerce and Industry until 2004.
After that, it was officially released. In 2004, when Aburizal Bakrie was the Chairman of Kadin, I was the first ICC chairman who is not the chairman from Kadin until now. We have not many members, about 50 members. There are various types of business fields, such as banks and logistics companies.
What is ICC?
Our mission is very simple:
Promote the cross-border trade and investment, and help businesses address the challenges and opportunities of globalization. The mission is contained in three main activities. First, making the rules used by the international business world. Particularly well known are the Incoterms (International Commercial Terms), globally standardized terms used in international trade. We often hear the term free on board, for example, it is part of Incoterms.
The second activity is business conflict resolution. There are several ways and the best known is arbitration. The ICC’s arbitration is the oldest in the world. The third activity is making policies. So, we are not doing business, but building infrastructure or infrastructure.
Regarding arbitration, why wasn’t it an option when in conflict?
Maybe not many people know. Therefore, we continue to socialize. We ourselves are an arbitration institution. Thus, in the business contract, it can be stated that if a dispute occurs, it will be resolved through arbitration according to the provisions of the ICC. This is common in international contracts. I think it’s a useful facility if we do business according to existing regulations. If we bribe, it is no longer an open secret that there is such a thing as judicial mafia. In fact, arbitration has more value: neutral, final, enforceable, so that it can choose an arbitrator.
How does the ICC contribute to the development of the trade sector?
As in other countries, we do a lot of training, especially human resources. Not developing human resources in all fields, but specifically for matters relating to international business.
What are the breakthroughs that have been made in Indonesia?
I can give an example. Together with the Indonesian Chamber of Commerce and Industry, we encourage Indonesia’s participation in the ATA Carnet system, this was not happened before. This is a facility to enter and remove goods without paying import duties. It really makes it easier for the MICE (Meetings, Incentives, Conventions, and Exhibitions) industry, for example. Previously, when there was a conference, bringing in goods had to pay import duties. With ATA Carnet there is no need.
Any special plans this year?
Prior to this we conducted many seminars and training activities in the banking sector to export-import. We recently conducted a one-day workshop on anti-corrosive business activities. From now on we will present a commission, according to the one at the head office, namely the corporate responsibility commission and the anti-corruption commission.
How do you view the government’s target of increasing exports by 300% in five years?
That target is possible. However, many requirements must be met. Of course, the logistics must be improved. We know that logistics costs in Indonesia are very expensive. Infrastructure must be improved. If we send very expensive and long goods, of course we cannot compete. The key is to compete in the international world, for us to increase it threefold, it means that we have to increase our competitiveness. There are also many procedures in Indonesia. I think if all of this can be resolved, it could triple exports within five years.
Regarding the application of the Letter of Credit (L/C) which quite a lot of employers oppose, how do you see it?
I think the key is in socialization. If we open an L/C, it means that there is a correspondent bank in the destination country. The bank will certainly check whether the goods sent are suitable or not when they arrive. There are documents included. If everything is OK, then the bank will say it can be paid. The business world shouldn’t have to worry, it should have accepted the L/C provisions well.
However, the condition is that the bank must have an expert. In Indonesia, about 120 people have a CDCS (Certified Documentary Credit Specialist) certificate or an expert on new credit documents. It is so small. India already has more than 7,000 experts. China even has 12,000 people. Maybe now it is more than that because it was last year’s figure. You can imagine that two Asian countries are very active in international trade and are supported by many experts. Maybe people say L/C is complicated because we don’t really have many experts. If you have many competent experts, I do not think it’s complicated at all.
Apart from arbitration and L/C, what else do you see that needs to be developed?
Commercial law needs to be mastered. We need to understand the contents very well. That is because sometimes we do business without understanding the rules and laws that apply so that if there is a problem, we will be surprised. If we master all of that well, we can anticipate. Generally, when we conduct international business activities, our partners overseas are very familiar with the law.
Source: Bloomberg Businessweek Indonesia magazine, 11-17 May 2015 edition.