University of Tehran Iranian Economic Review 1026-6542 30 2 2026 06 01 Shall the Indonesia-OIC Countries’ Free Trade Agreements on Modest Fashion Be Implemented? 715 743 97487 10.22059/ier.2024.373324.1007956 EN Masruri Muchtar Department of State Financial Management, Polytechnic of State Finance STAN, South Tangerang, Indonesia. 0000-0002-6107-1115 Ario Seno Nugroho Department of State Financial Management, Polytechnic of State Finance STAN, South Tangerang, Indonesia. 0000-0002-6838-3381 Sri Murwani Department of State Financial Management, Polytechnic of State Finance STAN, South Tangerang, Indonesia. 0009-0003-4680-6130 Journal Article 2024 03 03 A free trade agreement (FTA) could be a first step towards greater economic integration among OIC countries. This paper explores the impact of the proposed Indonesia-OIC Countries FTA on the modest fashion industry under a general equilibrium framework, focusing on indicators such as welfare, GDP, trade balance, investment, and job opportunity. It utilizes computable general equilibrium (CGE) analysis using the Global Trade Analysis Project (GTAP) model. For analysis purposes, 65 GTAP sectors, representing the whole regional economy, have been aggregated into four sectors, and 141 GTAP regions, representing the whole world, have been aggregated into 13 regions. The scenario is Indonesia conducting an FTA with ten potential OIC export destination countries by reducing import tariffs for modest fashion products to 0%. It is predicted that Indonesia will receive the highest welfare increase of USD 140.83 million, followed by Morocco. The highest positive impact on real GDP will be experienced by Indonesia, with a positive change of 0.004%, followed by Morocco and Turkey. Egypt is projected to experience the largest decline in real GDP. Indonesia is projected to experience the most significant trade balance deficit, amounting to USD 198.13 million. Almost all OIC countries will experience an increase in investment, especially Indonesia, which is predicted to increase by 0.069%. Both skilled and unskilled workers will experience increased employment opportunities across all modest fashion industries. This paper contributes to the literature by focusing on critical aspects of the FTA's impact on modest fashion through the elimination of import tariffs among OIC countries. https://ier.ut.ac.ir/article_97487_f052d1708d0c10d62d856020ae4e5466.pdf