Indonesia' trade and defense ministry are exploring the mechanism of trade-off with several trading partners to boost the export values, said the minister today (07/17) - Photo the Trade Ministry Office

JAKARTA (TheInsiderStories) – Indonesia’ trade and defense ministry are exploring the mechanism of trade-off with several trading partners to boost the export values, said the minister today (07/17). Some commodities that were ready to be traded are palm oil, rubber, machinery, coffee, cocoa, tea, textile products, footwear, processed fish, furniture, fruits, copra, plastics, resins, paper, and spices.

“The purpose of the trade-off is to balance the trade between Indonesia and trading partners and bring in foreign exchange revenues (to the country),” said minister of trade, Agus Suparmanto, in an official statement.

The legal basis for the trade-off is Law Number 16 of 2012 concerning the Defense Industry, Government Regulation Number 76 of 2014 concerning Trade Return Mechanisms in the Procurement of Foreign Legal Entities, and the Government Regulation Number 29 Year 2017 concerning Paying Together and How to Deliver Goods.

Then, Defense Ministerial Decree Number 30 Year 2015 concerning Trade Returns, Local Contents, and Offset in the Procurement of Tools and Equipment from Overseas Security also Trade Ministerial Decree Number 40 of 2019 concerning Provisions for Purchase Returns for Procurement of Imported Government Goods.

Suparmanto said, the benefits of trade-off is to overcome the barriers and constraints to export destinations and expand market areas and new products, provide on top an additional exports, save foreign exchange, and to overcome the difficulties in imports due to foreign exchange limitations.

“With the trade-off scheme, Indonesian export can support national economic growth,” he said.

Last year, the government has proposed to barter Indonesia Fighter Xperiment (KFX/IFX) purchases with the country’ CN-235 aircraft produced by PT Dirgantara Indonesia caused the country have limited funds to pay with cash. The state-owned company has cooperation with Construcciones Aeronáuticas SA (CASA).

Earlier, Indonesia has use the scheme when it bought 11 Russian-made fighter jets, the Sukhoi SU-35 in 2017. The country barter the fleet purchases with crude palm oil, rubber, coffee, cocoa, tea, textile and other goods, with total amount $1.14 billion.

The total funding for the jet fighter projects until 2026 is planned to be around $8 billion, divided between South Korea (80 percent) and Indonesia (20 percent). The country has paid 132 billion Won ($112.34 million) to South Korea as a 2016 contribution to the development of the KF-X fighter program.

Even though 2017 and 2018 contributions have not been deposited, South Korea considers that payment is enough to erode fears that Indonesia will exit this strategic project. South Korea also continued the KF-X program and hoped that Indonesia would actively participate in all stages of its development.

Since 2011 until the end of 2018, the process of developing 4.5 generation fighter aircraft which is a collaboration between Indonesia and South Korea, KFX / IFX, has reached 20 percent. These fighter planes are targeted to be mass produced only in 2026 after testing and certification.

While the number of aircraft to be produced reaches 168, with details South Korea will have 120 aircraft and 48 Indonesian units.

US$1: 1,204.54 Won

Written by Editorial Staff, Email: theinsiderstories@gmail.com