Sabtu, 17 November 2012

Liberalisation of Services on Tourism Sector


The  Perspective of Liberalization of Services  in the Law Number 10 Year 2009  Regarding Tourism

IGN Parikesit Widiatedja
Lecturer of Faculty of Law Udayana University
ngurahparikesit@gmail.com


ABSTRAKSI
Pemerintah Indonesia pada akhirnya menerbitkan Undang-Undang No. 10 Tahun 2009 tentang Kepariwisataan. Ditinjau dari pendekatan kedalam (inward looking), undang-undang ini berupaya mengembalikan ciri dan karakteristik pariwisata Indonesia yang sarat dengan kekayaan alam dan budaya. Sementara dari pendekatan keluar (outward looking), undang-undang ini berupaya meningkatkan kapasitas dan memobilisasi segenap sumber daya pariwisata kita dalam menghadapi   liberalisasi jasa sebagai realitas kontemporer yang perlu diwaspadai bersama. Tulisan ini akan mengidentifikasi perspektif undang-undang kepariwisataan dalam kaitannya dengan liberalisasi jasa melalui parameter: 1. pemberian warna penekanan pada pelestarian kekayaan alam, budaya,lingkungan hidup, 2. pengakuan kegiatan berwisata sebagai Hak Asasi Manusia (HAM), 3. pengakuan prinsip non diskriminasi, 4. peningkatan kualitas sumber daya manusia, 5. pemberdayaan usaha kecil menengah dan koperasi, 6. pelibatan pemangku kepentingan dan 7. pendirian Badan Promosi Pariwisata Indonesia (BPPI).

Kata Kunci: Perspektif Liberalisasi Jasa, Undang-Undang Kepariwisataan

I. INTRODUCTION
In the third milenium, a challenge ahead is obviously convoluted which is being discerned by liberalization in many fields. It had been epitomized through comprehensive negotiations of trade in Uruguay Round when 123 nations agreed to establish the World Trade Organization (WTO) in Marakesh, Marocco.  That crucial moment could be a stepping stone of proliferation in liberalization because of their substantial coverages encompassing  investment, intelectual property rights and services were an integral part of tradable activities.

Despite being debatable, all participants commited to establish a multilateral framework of principles and rules for trade in services that were well-approved as General Agreement on Trade in Services (GATS). They had hoped if GATS with entered into force in january 1995, could remove any restrictions and internal governmental regulations in the area of services  whose  impact eventually emerged trade harrasment. It was also closely related with the potential  contribution of services for the world economy which are going to be the largest and fastest growing sector. In 1999, the value of cross-border trade in services amounted to US$ 1350 billion, or about 20% of total trade. This understates the true size of international trade in services much of which takes place through establishment in the export market, and was not recorded in balance of payments statistics. Since the past two decades, trade in services has been growing faster than  merchandise trade[1].

Indonesia binded itself through promulgating law number 7 year 1994 regarding The Ratification of Agreement of Establishing the World Trade Organization (WTO) including GATS. The increasing performance of development was an essential consideration to ratify its agreement that was progressively allowed the operation of foreign services provider. Indonesia’s government though over that GATS would be a conduit of its goal to be just and properous of our community which is clearly mentioned in the preamble of the Constitution of the Republic Indonesia of 1945.

As a sector that has been legally binded in GATS, tourism  is moving to be one of the most dynamic sector of economic activity, generating a wide range of benefits including foreign exchange earning and a growing contribution to the GDP which in some cases reaches over 10%. Tourism has been a popular global leisure activity. In 2007, there were over 903 million international tourists arrival, with a growth of 6.6% as compared to 2006. International tourist receipts USD 856 billion in 2007[2].

Based on that figures, it is not coincidence if all countries attempt to lure many tourists as much as possible that were openly liberalized as  impact of GATS. Myriad special programs of tourism with followed by creative and innovative promotions have been undertaken. They believe if tourism that is viewed as the colaboration of amusement, entertainment, enjoyment and education, will be a robust sector and can be immune from the symptom of economic slowdown currently.

According to its potential tourism resources, Indonesia is widely recognized as the world’s largest archipelago. It has more than 17,000 islands, 300 different ethnic groups and 250 distinct languages. For tourism, it brings competitive value that can provide the diversity of its products. Moreover, as an indispensable part of growing Indonesia’s economy which is being reconstructed after massively crisis in 1998, tourism has been becoming a solution of our twin towers problems  in reducing unemployment and alleviating poverty. In 2008, tourism sector contributed about 70 trillion rupiah and received 6.45 million foreign visitors with each spending up to 1,178 dollars per day.

Desiring to build capacity and mobilize all resources of tourism all at once compete globally, Indonesia has promulgated the law number 10 year 2009 regarding tourism. As reffered to its consideration, the development of tourism shall be aimed to encourage equally opportunity of doing business, gains substantial benefit and faces again challenge of immense change  both locally and nationally as well as globally. The content of this law encompassing the right and obligation of tourism practitioners, the development of tourism in comprehensively and sustainably, the coordination of across sector, the establishment of strategic area, the empowerment of small-medium enterprises, the establishment of tourism promotional board, the establisment of asociation of tourism, the standarization and competency of tourism employee and the empowerment of human resources.

This discourse  attempts to identify meticulously which content of its law can be clustered as government’s perspective in responsing liberalization of services. Author think over that it is worthwhile to analyze and asses  the readiness of tourism stakeholders to compete either directly or indirectly with foreign services provider, that have been rampant in Indonesia after the enactment of GATS. Desiring to engender a positive outlook of our future, Author expects to convey clearly information for socializing and disseminating the newest  law of tourism in a view with liberalization of services.

II. SOME HIGHLIGHTS IN RELATED WITH LIBERALIZATION Of SERVICES

1. The stressing point of preservation of nature, culture and human environment

Refering to the consideration of the law of tourism, our natural wealth which are granted and entrusted by God as well as cultural heritages, have becomed huge capital and resources  for the development of tourism to be just and prosperous of Indonesia’s community.  Hence, as an integral part of our national development, tourism is designed sistemically, well-planned, integrately, sustainably and responsibly as a means of protecting our religious value, cultural heritages  and the conservation of human environtment.

All those concepts have been elaborated in several articles in law of tourism. Article 4 point e and f, have decided if tourism has a main goal to preserve our natural wealth, human environment and  cultural heritages. As reffered to article 5 point d, The implementation of tourism principle must not  neglect with the preservation of nature and human environment. In article 6, The Development of tourism must be undertaken based on article 2 through realizing the action plan of the development of tourism concerning natural and cultural diversity, uniqueness and characteristic as well as and the fulfillment of human need in tourism activity

As a concrete measure, government which is clearly mentioned in article 12(1), has finally decided a strategic area of tourism which becomes particular area with the high level of potential development and has significantly influenced of tourism activity that underlied by several  aspects comprising tourism and natural resources, potential market, strategic position, protection of certain location which has a role for maintaining tourism function and its carrying capacity, strategic area which has a role for protecting cultural assets, the support and readiness of people and the relevant characteristic of its location.

The stressing point of preservation of natural wealth, cultural heritages as well as human environment can also be reflected from article 23 (1) which is strictly obliged all governments both central and regional levels  to  maintain, improve and preserve our national assets that becomes national attraction of tourism which have not been explored yet. In financial aspect as reffered to article 57 untill 59 that  becomes collective responsibility of tourism stakeholders, government is also obliged to alocate at least half of their income from tourism activities for the preservation of natural and cultural needs.

No one can deny if our natural wealth, cultural heritages and human environment are three inseparable capital that can be regarded as our comparative advantage for competing in liberalization era. The sucessfully implemented of tourism managerial will depend on our harmonious and balance principle while gaining benefit from their components. Due to its priceless and irreversible value, they must be exploited, preserved and passed on with three main pilars comprising economically viable, lawfully creditable and environmentally sustainable.

The political will of government through its law of tourism  to stress our natural wealth, cultural heritages and human environment all at once in financial obligation to manage them has been commendable. It must become a starting point to optimally enhance our comparative advantage. As a reality of contemporer and need to be promptly responded, liberalization of services requires the high level of management with fully covered by broader paradigm and concept, transparency administration, financial accountability, and effective supervision in tourism as well as  supported by actively participated of all tourism stakeholders including people and tourism practitioners. Because of its law, government has formed the main priority of our tourism concept and it should be easier and well accepted for other relevant stakeholders to uphold it because they know what should be developed and placed as a primarly priority of doing activities in tourism.

Nonetheless, we must be aware and alert with the detrimental effects which easily arise from unbridled and uncontrolled of developing tourism. The exploitation of those components will be occurred if it is treated without any respect and responsibility and  only become commercial comodities to pursue short-term progress. It can not only be assumed that the more tourists here, the bigger income will be. That is the main challenge to all stakeholders how to see clearly if all those components must be administered to maximize the benefit while minimizing the negative one as well as consider with our future generation needs.

2. The Recognition of Tourism activity as a human right.
Refering the consideration of law of tourism, the freedom to undertake travel and leisure activity is strictly recognized as a human right. Article 5 point b has expressly stated that the management of tourism based on a human right recognition, cultural diversity and local wisdom with followed by article 19 (1) point a that mentioned if every people has a right to fullfil their  needs  in tourism activity.

This effort must be applauded as it denotes the government  commitment to recognize and ensure social and economic rights as well as civil and political rights.[3] Afterwards, it will reinvigorate tourism sectors which has ever got ordeal such as catastrophic disaster, horrible terorism and terrible disease. Eventually, Indonesia’s tourism can be exist even thrive in facing fierce competition as impact of liberalization of services without neglecting with its goal to reduce unemployment, alleviate poverty and rectify imbalances in our national development.

However, this concept does leave ample room for interpretation whose its  term and meaning has not really been comprehended well by tourism practitioners. Notwithstanding of its article, how do we uphold it concept while the awareness, perception and recognition in other sectors which have been promoted since the last decade, have been relatively low. Furthermore, government who ought be a role model, has been unable to enforce human rights abuses which was committed in the past.

3. The actualization of non-dicrimination Principle
Desiring to facilitate the increasing participation of all stakeholders, they have an equal right  of doing tourism activities. Government is also formally obliged to provide condusive climate for business activities such as equal oppurtunities and law certainty. It can be found in article 23 point b. Meanwhile article 26 point c also oblige that every business practitioners of tourism  must provide services in line with non-dicrimination principle.

Non-discrimination principle must be accorded immediately and unconditionally that should become a paramount prerequisite in every movement of liberalization in all countries entire the world. The enforcement of its principle will eliminate differencial treatments in order to protect certain products both production and distribution as well as consumption levels from person or legal entities who have intimate relationship with the decision maker which tend to be deceptive and fraud. Unfair trade and monopoly as impact of their activities are the major argument why all those thing is very taboo to be undertaken currently.

4. The increasing quality of human resources.
Pursuant to Article 11, government in together with concerned institution must conduct sustainably research and improvement  for tourism in order to support the development of tourism. Afterwards, article 26 point h emphazis that every business practitioners of tourism are obliged to strengthen the quality of their employee through education and training skills. Meanwhile, government as reffered to article 28 point g, has authority to the improvement of human resources through its policy in tourism. Meanwhile, the sertification and standarization of employee in tourism can also be categorized as a government measure to increase our quality of human resources. As referred to article 53, all employees who involve in business activities of tourism must have the standart of competency through sertification of competency which has been conducted by the institution of profesional sertification.

Government admitted that one of the main obstacle was the low quality of human resources. As reffered to the law number 17 year 2007 regarding The National Plan of Long-Term Development (RPJP), our human development index still 0,697 and placed in 110 out of 177 countries  with the purchasing power parity only reach US$3.361. It triggered a low performance of development as human resources even created the inundation of unemployment here which fully covered by low-level of skills, poor-concept of management and pragmatism of mindset.

Desiring to embattle all those challenges, the implementation of government measures for increasing human resources of tourism shall ensure to produce well-qualified both knowledge and skills and mold their character as a part of human empowerment  who are able to partake and compete mainly with foreign services provider. All those strategies can be conducted either through formal and informal education. The excellent curricula which becomes a general guidance in a view with the management of human resources, ought to be a starting point to attain our goal as a means of  building our domestic services capacity and its competitiveness as well as eficiency in the liberalization of services era.

5. The empowerment of small-medium enterprises
Article 17 clearly mentioned that government in any levels are obliged to  improve and protect small medium enterprises in tourism through a policy in order to reserve  business activity of tourism  for small-medium enterprises and cooperation. Beside that, they are also obliged to facilitate joint partnership beetwen small medium enterprises and  cooperation with the giant of tourism business on a mutually advantageous basis.

The number of small medium enterprises is high in all sectors.  Recent data from Indonesia’s statistics bureau showed  that in 2006 they accounted for 99,98 % of all enterprises and absorbed over 61 milion job or slightly over 60% of total empoyment of Indonesia.(Indonesia’s Statistics Bureau,2009) That’s why they have cardinal role in the development of the local economy especially in reducing poverty by creating job opportunities. Sketchily, empowering them means empowering the public economy, potentially propelling sustainable growth.

In the perspective of the liberalization of services, its reality will invite foreign service provider in Indonesia which can be categorized as high-scale of business with their sophisticated technology and infrastructures, unlimited fund, well-prepared skills and well-organized teamwork.  It will not be fair if they can compete unconditionally with small medium enterprises and cooperation as the biggest portion of our economic posture. In terms of welfare state, It is reasonable and undeniable if Government must protect them to keep their existency growing. The development of small-medium sector eventually will be a pathway to progress of a sustainable economy and also a sense of national pride.

Hence, government measures shall be aimed at assisting and facilitating small-medium enterprises and cooperation in overcoming their  major constraints to  grow up emanated from  the low level of technology, shoddy skills of management, traditional concept of marketing, cumbersome licensing, limited  funding, difficulty of acessing credit  and high pollution of environmental performance.

6. The involvement of all stakeholders
Article 9 (4) has clearly mentioned that government must involve and facilitate actively participated of all stakeholders while formulating an action plan of tourism. Likewise in the financial aspects as reffered to article 57 which is also mentioned as collective responsible.

Based on its law, Government is cognizant  that the development of tourism must involve  broader participation of all stakeholders in which their policies are being executed. As a part of good governance principle, this measures also crystallise their aspirations to be strong and cohesive movement of managing tourism. It will be  a positive and constructive balancing power to see more independently and clearly how to navigate tourism activities based on sustainable development principle. A lot of information can be absorbed from them like what are the benefits? what are the obstacles? what are they going to do? And what do they expect in the future? In the other word, the involvement of all stakeholders will engender aptly policy all at once create a huge opportunity to boost the carrying capacity of tourism.

7. The establishment of tourism promotional board
As reffered to article 36, it is clearly mentioned that government is obliged to facilitate the establishment of tourism promotional board  which is located on the capital of Indonesia. This board is private institution which has independent position. Afterwards, article 41 has elaborated the task of tourism promotional board encompassing
a.   to increase Indonesia’s tourism image,
b.  to   increase   the    number   of foreign  tourist arrival and foreign exchange income,
c.  to   incrase    the  number   of    domestic  tourist  arrival  and  its educational process,
d.   to collect fund apart from national and regional budgeting in lawfully,
e.   to conduct research to the improvement of the business of tourism.
Meanwhile, its function encompassing
a.   as the coordination board in the tourism promotional that have been undertaken by tourism practitioners
b.      as a working partner of government both central and regional levels.
In the liberalization of services, promotion of tourism is one the most valuable and meaningful strategy for moving forward. At least, it has major functions encompassing:
1.  building  and   restoring our image. For tourism, image is more important than tangible resources, all because perceptions rather than reality are what motivate consumers to act or not act (Gallarza in Pitana,2005:65).
2.  focusing to   campaign  our nature wealth,   cultural heritages and human environmen which have been generally assumed as our competitive advantage and introducing special policies and programs which have been made by government and business practitioners.
3.  notifying all measures both preventive and represive of government to reassure international community that they have been serious in managing detrimental effects of tourism both economy, social and culture.
III. CONCLUSION
 The perspective of liberalization of services in the law number 10 year 2009 can be divided into three kinds of perspective comprising short-term perspective, mid-term perspective and long-term perspective. There are four measures whose it results can be assesed effective or not, no longer than five years including the increasing quality of human resources, the empowerment of small-medium enterprises, the involvement of stakeholders and the establishment of tourism promotional board. All those measures must be implemented promptly and consistently to build our tourism capacity and mobilize its resources as a means of growing our competitiveness and eficiency.

The recognition of tourism activities as a human right and the actualization of non-discrimination principle are the next measures which can be categorized as mid term perspective. These measures will become a golden bridge to build, promote and maintain our competitive advantage in tourism which is well-endowed by natural wealth, cultural heritages and human environment. Hence, the stressing point of preservation of their capitals can be categorized as long-term perspective in a view with liberalization of services.

Nevertheless, all measures have not finished yet because a great concept need a great implementation.  Tourism must be viewed holistically and integrally and government both central and regional levels must further formulate technical details to elaborate all of their  measures. Other stakeholders including tourism business practitioners and people must take an equal responsibility. They must be aware and care if their viable participation can assist government in navigating our tourism sector amid the liberalization of services era.

REFERENCES
-     Clift R,2003. Background Paper on the General Agreement on Trade in Services,http://www.cufa.bc.ca/brief/gats.html. Retrieved on 2009-06-02
- Pascal Lamy.2009. Globalization   and Trade Opening Can Promote Human Rights, http://www.wto.org/english/news_e/sppl_e/sppl128_ehtm. Retrieved on 2009-06-04
-      Pitana, I Gde dan Gayatri, Putu G,2005.   Sosiologi Pariwisata,   Yogyakarta: Penerbit Andi
-     Small-Scale          and         Micro      Establishment     Statistics,2009. http://www.bps.go.id/sector/comser/index.html. Retrieved on 2009-06-06
-   Tourism      and      Travel-Related  Services, 2004,  http://www.wto.org/english/tratop_e/serv_e/tourism_e.htm. Retrieved on 2009-06- 04
-   World     Tourism    Organization,     2007.   http://unwto.org/facts/eng/pdf/barometer/unwto_barom07_2_en.pdf. Retrieved on 2009-05-29
-      World  Trade  Organization, 2004.  Why  Is The   Liberalization of Services Important?, GATS: Fact or Fiction (online), http://www.wto.org/english/traptop_e/gats_factfiction.htm Retrieved on 2009-05-29.
-      Law Number 10 Year 2009 Regarding Tourism
-      Law Number 17 Year 2007 Regarding The National Plan of Long Term Development (RPJP)


[1]     World  Trade  Organization, 2004.  Why  Is The   Liberalization of Services Important?, GATS: Fact or Fiction (online), http://www.wto.org/english/traptop_e/gats_factfiction.htm Retrieved on 2009-05-29.
[2] - World     Tourism    Organization,     2007.   http://unwto.org/facts/eng/pdf/barometer/unwto_barom07_2_en.pdf. Retrieved on 2009-05-29

[3] Pascal Lamy.2009. Globalization and Trade Opening Can Promote Human Rights, http://www.wto.org/english/news_e/sppl_e/sppl128_ehtm. Retrieved on 2009-06-04

Liberalisation of Services on Banks Sector


The Impact of General Agreement on Trade in Services  (GATS) 
for the Operation of Foreign Banks in Indonesia

by
IGN Parikesit Widiatedja
Faculty of Law Udayana University, Bali-Indonesia



Abstract

Despite being debatable, all participants committed to establish a multilateral framework of principles and rules for trade in services which was assumed as the proliferation of liberalisation. It was comprehensively accepted as General Agreement on Trade in Services (GATS) that became inseparable part of World Trade Organisation (WTO). They had hoped if GATS that entered into force in 1 January 1995, could remove any restrictions and internal governmental regulations in the area of services  whose  impact eventually emerged trade harrasment.

According to GATS, its substantial coverage encompassing bank as a legally binded sector in  liberalisation of trade in services. Indonesia agreed unanimously  to be bound by GATS through promulgating Act 7 of 1994. Hence, the sui generis (specific) regulation of bank sector was revised which gradually allowed the operation of foreign banks. This paper  attempts to identify and analyse meticulously what sort of impact  arise from liberalisation of bank service underlied by four modes of supplying services under article 1 of GATS encompassing cross-border supply, consumption abroad, commercial presence, and  natural persons presence.  In order to yield clear and objective explanation, its impact will be divided into positive impact and negative impact which significantly  influenced  the economic development in Indonesia.

Keywords: Impact, GATS, foreign banks

I.  BACKGROUND

In the post industry era, a challenge ahead is convoluted which is being reflected by liberalisation in many important sectors. It had been commenced through comprehensive negotiations of trade in Uruguay Round when 123 nations agreed to establish the World Trade Organization (WTO) in Marakesh, Marocco.  That memorable moment could be a stepping stone of proliferation in liberalisation because of their substantial coverages encompassing  investment, intelectual property rights and services were an inherent part of tradable activities.

Despite being debatable, all participants commited to establish a multilateral framework of principles and rules for trade in services that were well-accepted as General Agreement on Trade in Services (GATS). They had hoped if GATS with entered into force in january 1995, could remove any restrictions and internal governmental regulations in the area of services  whose  impact eventually emerged trade harrasment.
The main document of GATS was a framework agreement which was arranged comprehensively and integrally in the area of services including banks, telecomunication, financial services, air transport, maritime transport and tourism. Most Favoured Nation, National Treatment, Transparency and Progressive Liberalization were the paramount principles. Eventually, the enactment of GATS has becomed the new episode in the internationalization and institutionalization of services provision.

In  addition, since the last decade service sectors have potential  contribution  for the world economy which were going to be the largest and fastest growing sector. In 1999, the value of cross-border trade in services amounted to US$ 1350 billion, or about 20% of total trade. This understates the true size of international trade in services much of which takes place through establishment in the export market, and was not recorded in balance of payments statistics.[1]

Indonesia  agreed to be bound  by GATS through promulgating law number 7 year 1994 regarding The Ratification of Agreement of Establishing the World Trade Organization (WTO) including GATS. The increasing performance of development was an essential benchmark to ratify its agreement that progressively allowed the operation of foreign services provider. Indonesia’s government though over that GATS would be a conduit of its goal to be just and properous of our community which was clearly mentioned in the preamble of the Constitution of  1945.

As a sector that has been legally binded in GATS, banking sector  was estimated to achieve sustainability of the implementation of national development and to realize a prosperous society with Indonesia's economy is based on a uniform, independent, reliable, fair, and able to compete in the international economy, to be supported bysource of financing, among others,  came from the banking sector;Whereas banking berasaskan economic democracy with its primary function as a collector and distributor of public funds, has a  strategic role to support the implementation of national development, in order to improve the distribution of developmentand its results, economic growth and national stability, the direction of increasing standard of living of many

This shows that the banking sector is a sector which has the largest contribution in its goal of improving the welfare and prosperity of its people. May mean that a bank's progress in a country is positively correlated with the progress of the country concerned. The more developed a country, may mean that the greater role of banks contributing to economic growth and increase in welfare

Indonesia through Law no. 7 of 1994, have ratified the Agreement Establishing the World Trade Organization (WTO)  which  includes the GATS therein. Thus, Indonesia should   transform   the rules of international law contained in the GATS. The banking sector had become one of the sectors affected by the agreement whichbecame effective January 1, 1995 effective from the. In theconstruction of GATS, any bank operating in a country can expandto other countries as a form of internationalization of banking.Along with that, Indonesia had to open up to the operations of foreign banks who will openly compete with banks in Indonesia

This paper attempts to answer a series of issues around what and how the liberalization of regulation mechanisms of the services sector, particularly banks in the corridors of GATS? and impactsrelated to the presence of what caused foreign banks in Indonesia?

II. THE LIBERALISATION OF SERVICES IN THE PERSPECTIVE OF GATS

In the preamble of GATS, it is clearly mentioned that the purpose of establishing a multilateral framework of principles and rules for trade in services, is to  the expansion of tradable activities under conditions of transparency and progressive liberalization. Likewise as a tool of promoting the economic growth of all trading partners and the development of developing countries.

In the inward looking perspective, GATS has underscored the increasing participation of developing countries through  strengthening of their domestic services capacity and its efficiency as well as competitiveness. Meanwhile, in the outward looking perspective,GATS was aimed to ensure the equitable and fair treatment  which was accompanied  by overall balance of rights and obligation among  all participants.

Refering to the article 1 of  GATS, it can be distiguished into  four modes of supplying services encompassing:

1.  Cross-border    supply     is   defined   to  provide  services  from the territory of one member into the   territory of another member;
2.   consumption   abroad refers to situations where a service consumer moves into another member's territory to obtain a service;
3.   commercial presence implies that a service supplier of one member establishes a territorial presence, including through ownership or lease of premises, in another member's territory to provide a service;
4.   presence  of  natural persons consists of persons of one member entering the territory of another member to supply a service.

The definition of services is clearly mentioned in article 1 point 3.  Services    include     any  kinds of services  except services supplied in exercise of governmental authority. Afterwards, a service supplied   in the  exercise of governmental authority  must be defined as any service, which is supplied neither on a commercial basis, nor in competition with one or more service suppliers.

Within GATS, there are three main principles for al members and must be undertaken promptly and unconditionally. The first is Most Favoured Nations Principle (MFN) which can be found in article II GATS. It obliges that each member shall accord  an equal treatment to services and service provider from another country as well as from other countries of member.[2]

Transparency  which can be found in Article III GATS is the second principle. Each country of member must publish all the laws, rules of execution, and all generally applicable resolutions issued both by central and local government, which have impacts on the practices of GATS. Every change in laws and the addition of new rules must be reported to The Council of the Trade of Service (CTS). The countries must also comply with the demand of specific information from other countries of member about many generally applicable rules. Therefore, the countries have to find one information centre, or more, to provide all the information needed and demanded.

The last principle is National Treatment  which can be found in Article XVII. Within this principle, each member shall accord to services and service suppliers of any other member, in respect of all measures affecting the supply of services, treatment no less favourable than that it accords to its own like service and service suppliers.

The establishment of schedule of specific commitment is a part, that can be a crucial point  in which each country is obliged to set up a list of liberalized sectors accompanied by timely manner schedule. The commitment will be an integral part of the agreement and it has also  becomed an integral appendix. Refering to the article XX, each   member shall set out in a schedule the specific commitments with respect to sectors, where such commitments are undertaken. From each schedule shall specify:

a. Terms, limitations  and   conditions on market access;
b. conditions  and  qualifications on national treatment;
c.  undertaking     relating     to   additional commitments;
d. where   appropriate   the    time-frame  for  implementation   of    such commitments; and
e.  the   date    of    entry   into   force     of  such commitments.

Refering to the article XXI GATS, each member may modify or withdraw any commitment in its schedule, at any time after 3 years have elapsed from the date on which its commitment entered into force in accordance with the provisions of this article.

Recognizing the GATS provision and as a part of its strong commitment, Indonesia has also drawn up a schedule of specific commitments which is contained in the document GATS/SC/43 dated in April 1994.  Indonesia's Schedule of Commitments covers market access and national treatment for all four modes of supply and commits to the liberalization of telecommunications, industrial services, transportation services (maritime transport services), tourism and financial services.

Specifically,  in the banking sector, Indonesia's commitment in determiningthe operation of services of foreign banks in Indonesia based onthe GATS agreement covers:

In market access, foreign service suppliers who wish to sell orprovide services in the territory of Indonesia must be present inIndonesia. Its presence should be in the form of representative offices or joint ventures in the form of Limited Liability CompanyLaw Board

In cross border supply, on the banking sector held thatrestrictions on the number of services to foreign service supplierscan be serviced and the location of the establishment of branches and offices
Foreign service suppliers in the banking sector may only have anational bank shares as much as 49% of the shares sold through the capital market

III. THE REGULATION OF FOREIGN BANKS IN INDONESIA

The existence of foreign banks play an important role in sustainingthe activity of foreign investment in Indonesia.  Eleven branches of foreign banks have been established since 1968. In general, their role is to facilitate foreign investment and export-import activitiesand to develop the domestic industry within the framework ofeconomic development and expansion of employment opportunities. Foreign banks and banks operating in Indonesiamixture is a type of commercial banks. Activity has a role andfunctions similar to other commercial banks. that distinguishes it from Indonesia's commercial banks is they are more specialized incertain fields and there are some specific restrictions in connectionwith the transaction.
               
Foreign bank is a branch office of a bank outside of Indonesia arecurrently only allowed to operate in Jakarta and open sub-branches in several provincial capitals besidesJakarta namely, Semarang,Surabaya, Bandung, Denpasar, Ujung Pandang, Medan andBatam. Since mid-1999 foreign banks were given the opportunityto open its branch office in compliance with the requirements ofBank Indonesia. They can open branches only if the bank that ownsassets categorized 200 of the world's largest and is rated at leastA from international ratings agencies

As a follow-up participation in the GATS Agreement, the Government of Indonesia and then revise the banking laws through the issuance of Law no. 10 of 1998 concerning Amendment to Law no. 7 of 1992 which has mengakomodiir general principles of GATS. In the legislation there has been some revisions include:

The provisions of article 20 which has allowed the opening ofbranch offices, branch offices, and a representative office of a bank domiciled abroad, which can be done with the permission ofHead of Bank Indonesia

Provisions of article 26 in which every citizen of Indonesia, a foreign citizen, legal entity or Indonesia and foreign legal entitiesmay purchase shares of commercial banks, both directly and orthrough the stock exchange. Thus, there is no discriminationagainst the rights of purchase of shares of a bank
Provisions of article 39 which has declared that in carrying out its activities, each bank can use foreign labor

Article 21 then states that the legal form of representative officesand bank branches domiciled outside the country following the lawsof its home office. Then in terms of ownership provided for in article 22 which commercial banks can be established Indonesian citizens or Indonesian legal entities with foreign nationals or foreign legal entities and partnerships

A more detailed explanation can be found in Government Regulation Number 24 Year 1999 on Terms and Procedures forOpening of Branch Office, Branch Office and Representative Officeof a Bank Based in Foreign Affairs. Article 3 states that the bank isdomiciled abroad who can open an office in Indonesia is the banks that have a good ranking and reputation. Furthermore, in givingpermission opening bank offices located overseas, BankIndonesia besides attention to the soundness of the bank concerned, also pay attention to the level of healthy competitionamong banks, saturation level of number of bank offices in a particular region as well as the equitable distribution of national economic development

In carrying out its banking activities, Article 5 requires thatgovernmental regulation of branch offices, branch offices, office under branch offices, and representative offices of banks domiciled abroad, to carry out activities in Indonesia, subject to allrules and regulations laws in force in Indonesia and meet capitalrequirements set by Bank Indonesia

As a follow-up of the GATS agreement, Bank Indonesia as anIndonesian bank regulatory authorities will soon implement a gradual liberalization policy in the banking industry sector. The liberalization was meant to give wider access to the alien to establish, own and operate a banking institution in Indonesia,according to the demands of globalization in the financial services sector and in the GATS.

Liberalization policies will be directed at easing the rules. If all thisgives only restriction that foreign banks may establish and operate a bank here, will be extended by an opportunity for financial institutions to also be open and operate a bank in Indonesia. But the chances of foreign banks to enter more widespread in thisindustry, it must refer to the provisions or rules applicable inIndonesia, including the requirement for all prospective operatorsto follow the process of banking fit and proper test (fit and proper test) at Bank Indonesia. About the extent to which liberalization will be applied to Indonesia remain cautious with the use of similarreference in the sector liberalization adopted the ASEAN countries.

IV. IMPACT OF GATS FOR THE OPERATION OF FOREIGN BANK

GATS agreement in the tourism sector will give multifarious impact in tourism sector which has becomed steadily the second most contributor of foreign exchange after non oil and gas sector. Author attempts to identify what sort of impact both positive and negative arise from liberalization of services underlied by three inseparable perspectives encompassing: Government perspective, Business practitioners in tourism perspective, and Indonesia’s consumer perspective.
                               
Author expects through combining all those perspectives will engender objective and positive outlook,  and also accommodates interest of all stakeholders in tourism. In order to yield clear and objective explanation, the impact of liberalization of service in Indonesia’s tourism will be divided into positive impact and negative impact.

4.1 POSITIVE IMPACT

Basically, because of liberalization of services, all stakeholders have the same and wide opportunity to take part in the development of tourism. It also wil eliminate differencial treatments in order to protect certain products both production and distribution as well as consumption levels from person or legal entities, who have intimate relationship with the decision maker, which tend to be deceptive and fraud. Unfair trade and monopoly as impact of their activities are the major argument why all those thing is prohibited to be undertaken currently. For the consumer, they have freedom of choice to get the best services which emanated from services provider entire the world with accompanied by achievable price.

The emphasizment of good corporate governance will be indespensable in the liberalization of services era. Because it stipulates the rules-based system, transparent and accountable management and independence as well as fair principle. If we can undertake consistenly all those requirements, it will strengthen our domestic services capacity, its competitiveness and efficiency to compete directly with foreign services provider.

Further positive implications on increasing contribution of foreign banks for the development of banks in Indonesia. In turn they can push the rate of movement of other service sectors that lead toincreased economic growth in Indonesia. It is undeniable that the presence of foreign banks that are currently a total of 11, has contributed significantly to the development of national banks. With operations in Indonesia, they also can increase financial resourcesfor development efforts and spur the real sector which is currentlystruggling with the entanglement of the global economic crisis

The increasing participation of developing countries which was clearly ensured in the preamble of GATS will be a huge opportunity in reducing gap between developed and developing countries. The transfer of knowledge, technology and skills are the best way to attain its goal. Besides, it will stimulate the enhancement of competitive  value of our business practitioners to provide creative and innovative services based on effective and efficient principle. Otherwise, foreign services provider that have been congested here, will dominate our market.

Contributions of other foreign banks can be seen from the diversity of product innovations that make it a market leader. They have been pioneers in some derivative products such as credit linked notes, investment linked deposits, and asset backed securities, in which national banks are still a follower. Their presence certainlybrought a knowledge and technologies that benefit the interests ofbanks in Indonesia. As media technology transfer, the banks inIndonesia will find a variety of types and tricks of marketing, labormanagement systems, human resource development throughdiversification of its products

Another advantage to be gained is increasingly open economic system of a country with the GATS agreement in the banking sectorwas deregulated and the bureaucratization which has been abugbear for a bank in opening overseas offices. So with this all thebank's presence will have greater opportunities in marketingbanking products and not have to worry about the bureaucraticrules or intricate or overlapping each other. The existence of LawNo. 10 of 1998 is a concrete manifestation of follow-up to the Indonesian government against the GATS agreement

4.2 NEGATIVE IMPACT

The proliferation of liberalization which has been committed through Uruguay Round prone to assert developing countries have no choice to take part of its system. It was such an excessive argument when three new isues including services, intellectual property rights and investment, were categorized as an integral part of tradable activities. They proned to span myriad sectors in order to find new potential market in densely populated of developing countries which have not been exploited yet. The tendency of exploitation can also be detected from the market share of services. Since GATS entered into force in 1995, developed countries whose their giant transnational companies and tycoon businessmen were exist, have dominated the service sectors and emerged an oligopolistic market.

This situation depicts about scepticism whether developing countries will gain an benefit on such a liberalization of service especially to enhance their economic growth. It can not be undertaken drastically but through  a process sustainably and gradually with five phases including a traditional stage, a pre-condition for take off, take off, a drive to maturity, and an age of high-mass consumption.

In the matter of national sovereignity, it seems clearly that the sovereignty will be reduced gradually by liberalization of services especially in sensitive issues such as investment, telecomunication, air transport and tourism. J.G Starke uttered that it was probably more accurate  to say that the sovereignity of a state was the residum of power which it possesed within the confined laid down by international law.

Foreign bank ownership in the banking industry today hasincreased to 40%. The change of ownership is caused by the economic crisis that hit Indonesia starting in 1997 .. When compared to the time before the crisis, foreign banks control only 11%. Ownership of foreign banks that are too large can cause anegative impact on general economic conditions due to the presence of excessive ownership feared  would  happen a foreign intervention against any banking and economic policy in generalissued by the government of Indonesia

Another thing that can cause a negative impact is the possible presence of foreign banks affect the currency exchange rate of rupiah in Indonesia. This is very significant because of the influenceof the currency provides a tremendous effect for banking regulationand policy in Indonesia. For that Bank Indonesia must act decisively against rupiah speculation that foreign banks do with theban on the internationalization of dollars, this will release of rupiah from the influence of factors of political stability.supervision
against foreign banks and ban internationalization dollars will create a stable rupiah in state politics as anything else.

 Some time recently that foreign banks prefer to lend to the consumption sector by relying on technology and the networks theyhave. Foreign banks are very heavily in marketing their credit card, credit for automotive products, currency speculation and offerforeign currency deposits as well as dollars with lower interest rates than local banks in Indonesia. This situation can have a negative impact if held continuously since ultimately can lead to aconsumer culture for the people of Indonesia
Eventually, based on Francis Fukuyama statement, the economics who promoted liberalizing economic reform understood this perfectly well in theory. But the relative emphasis in this period lay very heavily on the reduction of state activity, which could often be confused or deliberately misconstrued as an effort to cut back state capacity across the board. The state-building agenda,which was at least as important as the state reducing one, was not given nearly as much thought or emphasis. The result was that liberalizing economic reform failed to deliver on its promise in many countries.

V. CONCLUSION

To sum up, GATS which strictly regulated the liberalization of services in tourism, has expected a pure commitment of all members for: actualizing fair and equitable treatment which is comply with framework agreement; eliminating all kinds of protectionism barriers in the international transactions; abolishing all kinds of discrimination measures and the dichotomy between domestic and foreign services provider upholding transparent and accountable principle in the international transactions.

The multifarious impact in tourism sector has emerged after the establishment of GATS. The positive impact are the equal and fair opportunity of doing business in providing tourism services, the actualization of good corporate governance underlied by effective and eficient principle, the increasing opportunity both from tourism income and transfer of technology, knowledge and skills. Meanwhile, the tendency of exploitation through the proliferation of liberalization, the reduction of state souvereignity and cultural degradation are the negative impact of liberalization of services.

Author suggests that all stakeholders in tourism must be cognizant and take equal responsibility in navigating tourism in the liberalization of service era. Henceforth, they must work hand in hand encouraging and nurturing each other to unleash Indonesia’s tourism true potential. In the inward looking perspective, the stressing point of preservation of our natural wealth, cultural heritages and human environment must be undertaken consistently and sustainably in order to maintain our comparative advantage. Meanwhile, in the outward looking perspective, all measures and strategies must be aimed to build capacity and mobilize all resources in tourism to compete directly with foreign services provider.

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