JAKARTA (TheInsiderStories) – Indonesia is hoping to seal at least 13 Bilateral and Regional Trade Agreements, followed by a comprehensive economic partnership agreement (CEPA) with several countries. The move aims to improve and widen market access for Indonesia’s exports.
Minister of Trade Enggartiasto Lukita acknowledged that Indonesia lagged behind Vietnam and the Philippines in terms of market access. While enjoying a commodity boom, Indonesia neglected downstream industry while the other countries worked hard to attract investors and create free trade access.
“President (Joko Widodo) warned us, our economy and inflation are stable, yet there is no significant progress (for exports) compared to peer countries because we are late to open up our regions,” complained Lukita.
To expand export markets, Indonesia will explore Africa, Asian, Nigeria, and Egypt as new markets outside existing partner countries e.g., China, Japan, United States of America and the European Union.
Meanwhile, in Latin America, Indonesia will speed up negotiations with Chile, through Indonesia-Chile Comprehensive Economic Partnership Agreement (CEPA).
The two countries will ratify the agreement soon, and this will mark a new era for the two countries and its businesses, which have been preparing to utilize CEPA to export products beyond traditional commodities.
Last year, the Ministry of Trade booked US$3.6 billion in transactions with African and Latin America trade missions.
In 2018, the government expects to continue six trade negotiations: Indonesia-Australia Comprehensive Economic Partnership Agreement (CEPA), Indonesia-European Free Trade Association FTA, Indonesia-European Union CEPA, Indonesia-Iran Preferential Trade Agreement (PTA), Regional Comprehensive Economic Partnership (RCEP), and Indonesia-Malaysia Border Trade Agreement (BTA).
Indonesia will also finalize a review on the Indonesia-Japan Economic Partnership Agreement, Indonesia-Pakistan PTA, Indonesia-Asean Economic Society, Asean-Australia-New Zealand FTA, and Asean-India FTA in 2018.
Early this year, the government started Trade in Goods (TIG) negotiations with Turkey, Nigeria, Sri Lanka, and Bangladesh.
Commodity Prices to Boost Exports
With the recovery of international commodity prices, Indonesia’s export prospects are expected to improve. Rising commodity prices are good for the Indonesian economy because the country is one of the world’s biggest commodity exporters.
The Government projects exports will likely grow to 5 per cent this year aligned with a Gross Domestic Product (GDP) of 5.4 percent next year.
According to the World Bank’s outlook, oil prices are forecast to rise to $56 a barrel this year from $53 last year, as a result of steadily growing demand, agreed production cuts among oil exporters and stabilizing U.S. shale oil production, while the surge in metals prices is expected to level off this year as well; agriculture prices are expected to edge up in 2018 due to reduced supplies, with prices of grain, oils and meals rising marginally.
Lukita said this will become momentum for Indonesia to optimize the agreement and bilateral trade to non-conventional countries.
As of November last year, Indonesia posted double-digit growth in the value of both exports and imports. Exports totaled US$15.3 billion in November, up 13.2 per cent over the same month a year ago and marking an increase of 0.3 per cent on October, according to Statistics Indonesia.
Imports also grew at a rapid pace in October, up 19.6 per cent year-on-year and up 6.4 per cent for the month prior to US$15.2 billion. That was likewise well ahead of expectations of 13.2 per cent growth.
Written by Elisa Valenta, email: firstname.lastname@example.org