The Utilization of AFAS on Indonesia's Retail Service Expansion to ASEAN Markets

The utilization of the ASEAN Framework Agreement on Services (AFAS) negotiations by Indonesia’s retail industry is still considered low. Retail business expansion to regional market is really expected to increase Indonesia’s trade performance and to maximize ASEAN market potential as its economic growth and population continue to increase. This study used Hoekman Index analysis to describe the level of openness of foreign retail services investment in ASEAN countries and SWOT analysis to find the strategies to utilize AFAS in order to increase Indonesia’s overseas investment on retail industries in ASEAN markets. The results of the analysis concluded that the level of investment openness of ASEAN member countries for foreign retail services is relatively open; but, Indonesia is less open than other ASEAN countries. Furthermore, based on EFAS / IFAS Analysis, Indonesia’s retail service sector has Opportunities and Strength as a way to develop its business in the ASEAN market with a strategy Progressive. As for other alternatives penetration strategies (entry mode) can be done, among others through full investment with foreign ownership of 100% to countries that have been fully open, joint venture, or through Indonesian retail franchise to ASEAN countries, which is the easiest and least risky way. Keywords— AFAS, SWOT, Hoekman Index