Chile hopes that cooperation with Indonesia can be developed into the infrastructure - Photo by InsiderStories.

JAKARTA (TheInsiderStories) – Chile hopes the cooperation with Indonesia can be developed into the infrastructure, sanitation and renewable energy sectors as a form of implementation of the Indonesia-Chile Comprehensive Economic Partnership Agreement (IC-CEPA) which was signed by the two countries since August.

“We hope that the IC-CEPA cooperation can also be directed towards toll road, sanitation, renewable energy, and other infrastructure projects. This is a good opportunity to establish industries in Chile,” Chile’s Vice Minister of Trade Rodrigo Yar’iez Benitez said in a Business Opportunities Event of IC-CEPA in Jakarta today (11/26).

He also conveyed his country’s commitment to increase the value of trade with Indonesia after the IC-CEPA. He considered the distance is not an obstacle.

“China is also far from Indonesia, but it is a major trading partner,” he said while hoping that Chile would become Indonesia’s main trading partner in the upcoming year.

Meanwhile, Indonesian Deputy Minister of Trade Jerry Sambuaga admitted that long distances could increase logistics costs for shipping goods. However, the problem of logistics costs can be slightly resolved because the two countries have agreed on trade cooperation.

“So, we can get the cost reduction with this agreement,” he said at the same event, saying IC-CEPA was a very historic moment. Besides being the first trade agreement with the South American country, IC-CEPA will also open the door for Indonesian export products in the South American region more easily.

Ni Made Ayu Marthini, Director at the Trade Ministry adding that the government is targeting trade with Chile could rise 32 percent, from US$278.5 million in 2017 to $369.2 million in the next five years. The export also projected to increase by 65 percent with the worth of $104 million.

She adds Chile is a potential country for increasing and diversifying Indonesia’s trade. Chile is the third-largest trading partner for Indonesia in the South American region, after Brazil and Argentine.

In 2018, the total trade between the two countries was $274.1 million. Meanwhile, in January – May period, total trade has reached $123.8 million, rose 3.25 percent from $119.9 million in the previous year.

Chile is Indonesia’s 55th export destination country with total exports of $158.9 million in 2018, up by 0.3 percent from $158.5 million in the previous year. As import partner, Chile ranks 63rd as the origin of imports with a value of $115.1 million in 2018, Marthini noted.

The commitment of two countries in IC-CEPA will eliminate import duty tariffs to 89.6 percent or 7,669 product tariff posts from 8,559 existing tariff posts. A total of 6,704 of them will immediately get 0 percent import duty tariff on August 10, 2019, while 965 tariff posts will be phased out over the next 6 years. Otherwise, Indonesia will remove tariffs on 9,308 tariff lines for Chilean products, said the director.

Indonesian products that get a 0 percent tariff on the Chilean market are agricultural products, such as spices, swallow’s nests, copra, vegetables, and tropical fruit; fishery products like eel, catfish, oyster, octopus, and sea cucumber; manufacturing products such as balls, automotive, paper products, furniture, food and beverage products, batteries, and leather bags.

While Chilean products that get 0 percent tariff on the Indonesian market are agricultural and fishery products such as apricots grapes, cuttlefish and clams; mining products such as copper, petroleum and coal gas; and industrial products such as sawn timber, chemicals, and motor vehicles.

The main and potential export products of Indonesia to Chile that receive preferential rates are footwear; vehicles and their components; machinery and equipment; knitwear and the accessories; electronics and components; non-knitted clothing; washing soap; grain oil; textile material; paper; coffee, tea, herbs; aluminum; artificial flower; fish and food the sea; and various chemicals.

“The government has mapped products that have not yet been exported to Chile but has the potential to increase the value of exports, such as palm oil and its derivatives. In addition, the government has also examined products that can use Chile as a hub for export to countries in the Latin American region, she went on.

According to Marthini, the types of products in trade between Indonesia and Chile are complementary, which brings benefits not only to exporters but also to Indonesian domestic businesses and consumers. Some positive impacts that can be felt immediately are the source of raw materials at a rate of 0 percent; support the hotel, restaurant and catering industry; and increase the choice of quality products.

Marthini explained, in order to take advantage of the opportunities offered by the agreement, businesses can obtain IC-CEPA preference rates by submitting a certificate of origin (COO) form at the time the declaration of import of goods is made, along with other documents. While for Indonesian exporters, COO can be obtained from the issuing agency
spread in cities, districts, and provinces in Indonesia.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com