JAKARTA (TheInsiderStories) — Indonesia rely on agriculture and livestock to slash the trade deficit with Argentina, said senior minister at the high level meeting in Jakarta, today (05/08).
After meeting with Vice-President of Argentina YM Gabriela Michetti and his delegation at his office, Coordinating Minister for Economy Nasution reported, the two sides discussed a number of matters relating an effort to increase economic cooperation in the fields of trade, investment and agriculture.
He said, Argentina is an important partner for Indonesia, one of them as the entrance of Indonesian products to the Latin American market. Recently, President Joko Widodo want his minister to explore other access of goods to the non-traditional markets.
Currently, he noted, the performance of economic cooperation between the two countries does not described the real potential. Based on government data, in 2018 Indonesia’ main export to Argentina namely footwear (US$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, the trade balance between the two nation still deficit in the Indonesian side, which amounted to $1.2 billion, widened 35.02 percent compared to 2017. This deficit is due to trade barriers and non-tariff rates, the issue of dumping, connectivity and language barrier.
For that, Nasution revealed, its necessary to formulate concrete steps in creating an 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, he added.
In addition, Indonesia is also exploring the establishment of free trade agreement (FTA) with the Trade Association of the Americas South. As a first step the establishment the FTA, Indonesia proposed a Joint Feasibility Study.
“I also want to invite businessmen Argentina to participate in Indonesia Trade Expo which will be held in the next Oct. 16 to 20,” said the minister.
To Argentina, Indonesia 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.
Furthermore, Minister for Agriculture Andi Amran Sulaiman expected to widen access over tropical fruit, spices, and other commodities to Argentina’s market.
“We have already learned, 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,” he said after meeting Michetti at his office.
Sulaiman explained that Indonesia’ pineapple production reached 2 million tons per year, and have been exported up to 250,000 tons to Asia, 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 potency to export chilli paste, onion paste, and fruit paste such as guava, manga and soursop. Other than that, he stressed to Michetti that Indonesia closed the tap of corn import, due to its self-sufficiency.
Indonesia has a wide trade balance gap with Argentina. According to Trade Ministry data, Indonesia’s trade with Argentina last year reached US$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.
Before met Nasution and Sulaiman, Michetti met Vice President Jusuf Kalla. According to Michetti, there is no specific discussion yet about investment. But she saw, lot of Argentina’ businessmen are interested in investing to Southeast Asia, especially Indonesia. She added, the sectors are Argentina’ specialties such as agro industry and food industry.
Moreover, Argentina also has specialty in infrastructure. She also expects to participate in Indonesia’s development. Michetti explained that Argentina could cooperate in both public or private sector development.
Argentina is rank 71 among investor countries in Indonesia. In the first quarter of 2019, its investment valued only US$5,000 from 3 projects.
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