August 3, 2005

Indonesian drug industry sources believe local firms will play a leading role in the regional market when AFTA — the ASEAN regional free trade agreement — comes into full operation in 2015.

All the ASEAN countries will be required to eliminate import duties by 2015, but founder members Indonesia, Brunei, Malaysia, the Philippines, Singapore and Thailand are due to end tariffs five years earlier. Local sources claim that with more than 200 drug firms, Indonesia's industry is more competitive than any other ASEAN market. Indonesian drugmakers are eager to enter to a potential US$6bn new market, with a population totalling 600mn.

In the meantime, Indonesian firms are also bullish on their home market. Local trade association GP Farmasi expects 2005 sales to grow 13% from last year's US$2bn, with exports accounting for roughly 5% of revenues.

Nevertheless, some sources are cautious about the ASEAN trade deal. Many are especially concerned by the competitive threat from Malaysia — whose drug firms are eyeing Indonesia's consumers, 10 times greater in number than their own. GP Farmasi has also called on ASEAN to ensure that quality standards are even across the region in order to allow fairer competition.