Indonesian Minister of Trade, Enggartiasto Lukita held a bilateral meeting with the Indian Minister of Trade, Suresh Prabhu in New Delhi, India, Friday (22/2) - Photo by Trade Ministry

JAKARTA (TheInsiderStories) – Indonesia and India continue to establish trade partnerships on various trade activities, such as reducing palm oil import duties, tariff and non-tariff policies, manufacturing industries, infrastructure, pharmaceuticals, coal, and various forms of trade, said the minister last week.

In the trade sector of palm oil, Indonesia and India have reached an agreement to reduce India’s import duty on refined, bleached and deodorized palm oil (RBDPO) from Indonesia through bilateral meetings between the two countries.

As known, currently the Indian import duty for RBDPO from Indonesia is 5 percent higher than the import duty of similar products from Malaysia which is only 45 percent. For this reason, Indonesia requests that Indonesia’s RBDPO import duty tariffs to India be reduced by five percent through the ASEAN-India Free Trade Agreement (FTA) scheme.

“India is Indonesia’s fourth largest trading partner. However, trade is not about ranking, and not only about surplus or deficit. Trade is about partnerships that are mutually beneficial and can contribute to the development of national and other countries,” said Lukita in a written statement.

He conveyed, palm oil and its derivative products played an important role in the Indonesian economy. As much as 60 percent of the total value of Indonesia’ exports comes from palm oil, and contributes to more than 50 percent of total world production.

For that, Indonesia shares responsibility in maintaining the availability of palm oil, providing labor, and alleviating poverty in the world because considering the world demand for palm oil is predicted to double to 308 million tons by 2050.

“Palm oil for Indonesia has an important value like sugar for India because the industry employs millions of people. In addition, this commodity is not just a product, but has values ​​that represent our people and culture,” said the minister.

Lukita notesd, in return for the reduction in customs tariffs, Indonesia was willing to open market access for raw sugar from India needed by national industries which had come from Thailand and Australia.

In addition, Indonesia and India are also committed to improving economic relations between the two countries through resolving tariff and non-tariff barriers.

“We agreed to eliminate tariff and non-tariff barriers between the two countries. This is in line with the principle of collaboration and partnership of this meeting,” he sated.

Based on data from the World Trade Organization (WTO), the tariffs applied equally to all WTO member countries (most favored nation-MFN) declined from 15 percent in 1995 to 9 percent in 2018 in the last 20 years.

However, at the same time, there are around 625 non-tariff barriers notified to the WTO every year. This figure increased very significantly to 1.400 non-tariff barriers between 2005 and 2017.

“In ASEAN, the average rate reduction from 2000 to 2018 reaches up to 50 percent of the original tariff rate, but the number of non-tariff barriers has tripled. These non-tariff barriers in their excessive and discriminatory use will add to costs, which ultimately harm our industries and consumers,” he said.

Furthermore, participating countries of the meeting also discussed efforts to resolve Regional Comprehensive Economic Partnership  (RCEP) negotiations at the end of 2019 as instructed by Heads of State and Government.

India’ Minister of Commerce, Industry and Civil Aviation Suresh Prabhu himself expressed his commitment to contribute to the completion of the RCEP negotiations this year, but because of the April elections, India has not been able to give a major commitment to resolve some sensitive issues. He invited companies from ASEAN countries to take advantage and opportunities at this meeting to increase trade with India.

Meanwhile, the 25th RCEP meeting is being held in Nusa Dua, Bali on Feb. 19-28. In March the RCEP minister’s intercession meeting will be held in Siem Reap, Cambodia.

Director General of International Trade NegotiationsIman Pambagyo, said this year there would be more intersection meetings, especially Working Groups/Working Groups/Task Force to accelerate the completion of RCEP.

“2019 is a political year for most RCEP participating countries such as Thailand, Australia, India and Indonesia. However, all participating countries must continue their commitment to achieve the completion target this year,” he said in a written statement today (02/25).

Some issues that are still being negotiated in the RCEP negotiation round include trade in goods, rules of origin, trade in services, investment, electronic commerce, intellectual property, legal and institutional issues, financial services, telecommunications services, and trade security.

Expected that, with the agreement, Indonesia will get benefits, namely increasing market access, investment and opportunities to participate in regional supply chains which will lead to an increase in exports which is very important for economic growth.

Written by Daniel Deha, Email: daniel@theinsiderstories.com

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