Indonesia and Argentina are committed to increasing economic cooperation in several sectors ranging from trade and strategic industries, agriculture to education - Photo: President Office.

JAKARTA (TheInsiderStories) – Indonesia and Argentina are committed to increasing economic cooperation in several sectors ranging from trade, strategic industries, and agriculture. This was agreed at the bilateral meeting of the two country’ leaders, President Joko Widodo, and Argentine President Mauricio Macri, at the Bogor Presidential Palace, West Java, Wednesday (06/26).

Both leaders agreed to increase trade doubled or 100 percent from the 2018 achievement in 2021. The value of trade between the two countries in 2018 was US$ 1.7 billion (Rp24.14 trillion). This means that trade in 2021 is expected to reach $3.4 billion.

“Argentina is Indonesia’s second largest trading partner in South America. Earlier we discussed the improvement of economic cooperation, especially in the fields of trade, strategic industry, and agriculture,” Widodo said in a joint press statement.

Argentina is an important partner for Indonesia, one of them as the entrance of Indonesian products to the Latin American market. Recently, Widodo wants his minister to explore other access of goods to the non-traditional markets.

Currently, the performance of economic cooperation between the two countries does not describe the real potential. Based on government data, in 2018 Indonesia’ main export to Argentina namely footwear ($71.47million), rubber and rubber products ($46.79 million), as well as machinery and electrical equipment ($46, 3million).

Otherwise, the three main products imported from Argentina like oil cake from soybean oil ($934.98 million), cereals ($220 million), and cotton ($51.2 million). Overall, the country is one of the second largest trading partner of Indonesia for the South American region.

Total trade between the two countries in 2018 amounted to $1.68 billion, an increase of 17.96 percent compared to 2017. Meanwhile, Foreign Direct Investment from Argentina only $140,000.

However, Indonesia has a wide trade balance gap with Argentina. According to Trade Ministry data, Indonesia’s trade with Argentina last year reached $1.67 billion with a quite wide trade balance gap, $1.2 billion. Indonesia’s export to Argentina is $238.28 million while the import reached $1.44 billion.

During the first two months of 2019, the situation got worse. Indonesia-Argentina trade balance increased by 38.55 percent to $344,085, contributed by imports. On the other hand, Indonesia’ export fell by 28.86 percent to US$30,249. So the country recorded $283.586 trade deficit. The deficit is due to trade barriers and non-tariff rates, the issue of dumping, connectivity and language barrier.

For that, trade minister Enggatiasto Lukita revealed, its necessary to formulate concrete steps in creating impartial trade cooperation and mutual benefit, through the expansion of market access in Argentina for Indonesian products. Also diversification of export products and the reduction of trade barriers.

For this purpose, the two countries formed a work team which was marked by the signing of the Joint Statement on the Establishment of Working Group on Trade and Investment (WGTI). The team will later identify ways to increase trade in a more balanced manner for Indonesia.

“The working group will discuss with all elements of trade relations to address the potential presence of products, exchange knowledge and increase anything important to encourage bilateral trade,” said Bilateral Negotiation Director Ni Made Ayu Marthini who represented Indonesia in the signing.

In addition, Indonesia is also exploring the establishment of a free trade agreement (FTA) with the Trade Association of the Americas South, which is known as Mercusor, the largest trading block in the South American Region which consists of Argentina, Brazil, Paraguay, and Uruguay. As a first step the establishment the FTA, Indonesia proposed a Joint Feasibility Study.

To Argentina, Presiden Widodo also offers aircraft manufactured by PT Dirgantara Indonesia, especially the CN 212 and N 219. The aircraft will be used as a possible replacement of a variety of aircraft in the same class currently operated in Argentina. Also, PT Garuda Maintenance Facility AeroAsia Tbk (IDX: GMFI) offered cooperation in maintenance services and PT Industri Kereta Api offered international standard locomotives and carriages.

Furthermore, in the Agriculture sector, Indonesia expected to widen access over tropical fruit, spices, and other commodities to Argentina’s market. Indonesia has great potential to export exotic tropical fruits and spices to Argentina, such as pineapple, mangosteen, bark, coffee, and pepper. Other potentials are horticultural processed products for raw materials for the finished food industry.

Indonesia’ pineapple production reached 2 million tons a year, and have been exported up to 250,000 tons to Asia, the Middle East, and Europe. While Indonesia’ mangosteen export has reached 40,000 tons from 160,000 tons production. For bark, Indonesia exported 1,200 tons from 950,000 tons production in 2018. Moreover, for horticultural processed products, Indonesia has the potency to export chili paste, onion paste, and fruit paste such as guava, mango, and soursop.

US$1=Rp14.200

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

LEAVE A REPLY

Please enter your comment!
Please enter your name here