The membership of Indonesia in ACFTA made the businessman primarly in UKM felt to worry. Because China’s product had flooded market in Indonesia with better quality and relative cheaper price. But actually, this trade agreement opened exports opportunity to China will be bigger. China with the 1,3 milliar population in those country was interested for cooperation in the international trading. Various efforts were done to increase product competitiveness of UKM in Indonesia. One of [the] alternative solution was islamic production cost application, where total cost did not increase because used of capital not be charged with the interest rate.
Key words : ACFTA, free trade, islamic production cost