JAKARTA (TheInsiderStories) – Indonesia and India celebrated 70 years of bilateral relations between the two countries on Tuesday targeting the value of trade of US$50 billion (Rp 700 trillion) by 2025. The two countries commit to improving bilateral cooperation through a strategic partnership formed in 2005, which was then upgraded to a comprehensive strategic partnership in 2018.
“We have set a very ambitious target for the total trade value of the two countries of $50 billion by 2025. At present it is almost $19 billion,” said Deputy Minister of Foreign Affairs A.M. Fachir while speaking at the celebration in Jakarta, Tuesday (04/23).
Both countries are members of the G-20 group. The total value of Indonesia’s and India’s gross domestic product reaches more than $3 trillion. On the same occasion, the Indian Ambassador to Indonesia Pradeep Kumar Rawat emphasized that India, with the second largest population in the world, and Indonesia as the fifth largest population in the world, is very important in driving global economic growth.
Indonesia has an important meaning for the Indian economy because it is their biggest trading partner in ASEAN, Indonesia’s palm oil export destination, and the second largest coal importer for India. Based on statistical data, the Indonesia-India trade balance has a positive record with the best achievements occurring in 2017. In 2016 the trade balance between the two countries was only $12.9 billion with total exports of $10.2 billion and imports of $2.1 billion.
In 2017 (YoY), it increased by around 28.7 percent to $18.13 billion. The amount consists of export value of $14.98 billion and imports of $4.05 billion. As a result, Indonesia’s trade balance was a surplus of $10.04 billion. This number is the largest since 2013.
In 2018, the figure edged up by 3.36 percent to $18.74 billion. Even so, in the same period, Indonesia’s surplus decreased dramatically -13.22 percent to $8.70 billion from $10.04 billion. Close cooperation between businessmen of both countries is expected to encourage stronger strategic partnerships so as to reach the target of 50:50 by 2025.
For investment, India is also very important for Indonesia by recording a very significant increase in 2017, more than five times compared to the previous year from $55 million to $286.6 million. That number dropped again in 2018 which recorded an investment value of $82 million.
Based on data from the Investment Coordinating Board last year, India ranks 25th in the list of countries investing in Indonesia. This list was topped by Singapore with a total investment of $9.2 billion. Followed by Japan for $4.9 billion, China $2.4 billion, Hong Kong $2 billion, and Malaysia $1.8 billion.
Bilateral negotiations between the two countries continue to be carried out considering that India still charges 50 percent for Indonesia’s palm exports and their derivatives despite using the ASEAN-India Free Trade Agreement scheme. While Malaysia, in this case, benefited more because it was subject to lower entry rates, which is around 45 percent. Because since January 1, 2019, both of them have had Malaysia-India Comprehensive Economic Cooperation Agreement.
Statistics show that, throughout 2018, the export value of palm oil and its derivatives to India amounted to $15.2 billion, down by 11.2 percent from 2017 at $16.9 billion. 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.
Written by Lexy Nantu, Email: email@example.com