JAKARTA (TheInsiderStories) – The Association of South East Asian Nations (ASEAN) is taking center stage for Asia Pacific relations this week: 21 Leaders of the Asia Pacific Economic Cooperation (APEC) are winding up a summit in the beautiful coastal town of Da Nang, Vietnam, to be followed by an ASEAN Summit in Manila, Philippines. At the heart of these meetings is the urgent issue of how improving trade and investment can directly improve welfare of ASEAN citizens at large.
For Indonesia, its ASEAN neighbors have gradually become increasingly important in terms of trade or as export destinations.
Based on Statistics Indonesia data, Indonesia’s exports in 2016 reached US$144.43 billion, just 3.95 per cent below those of 2015, which improved after recording a fall of 14.6 per cent the previous year. Interestingly, in terms of value, exports to ASEAN countries already represent 21.9 percent of total exports, followed by those to the United States (U.S), at 11.94 per cent, China at 11.5 per cent and Japan at 10.06 per cent.
Export growth is also quite encouraging, with growth to ASEAN reaching 15.3 per cent, the highest figure for export destinations, followed by the China, 13.9 per cent higher. Meanwhile, exports to the U.S and Japan grew by 2.46 per cent and 0.89 per cent, respectively.
In the nine months to September, Indonesia’s non-oil and gas exports to ASEAN reached $24.17 billion, up 12.6 per cent year-on-year, and represent 21.6 per cent of the total, followed by China, valued at $14.6 billion (13.02 per cent) and the U.S at $12.8 billion (11.5 per cent).
Indonesia’s non-oil and gas exports to ASEAN were mostly channeled to Singapore and valued at $6.7 billion in the nine months to September, down 6.8 per cent year-on-year (YoY), accounting for 6 per cent of the total, followed by Malaysia valued at $5.2 billion, up 20.3 per cent from the same period last year, or 4.6 per cent of total exports, Thailand valued at $4 billion or 3.6 per cent of total exports, while exports to other ASEAN countries reached $8.3 billion, up 25 per cent, representing 7.4 per cent of total Indonesian exports.
This indicates that ASEAN is increasingly becoming an important trading partner for Indonesia. Indonesia needs to take advantage of gradually integrating ASEAN economies, especially following the effectiveness of the ASEAN Economic Community (AEC) sessions early this year.
The Trade Ministry is taking the lead in trying to boost intra-ASEAN trade, as shown during the APEC Summit late last week. As many as 26 leading Indonesian companies, including property, automotive, food and beverages, pulp and paper, fashion, craft and garments are taking part in the exhibition.
“This trade exhibition is an effort to introduce and promote Indonesian products to the Vietnamese community. In addition, the event is expected to attract the business community in Vietnam to forge cooperative business ventures with Indonesian partners,” the Trade Minister Enggartiasto Lukito said.
According to the Minister, bilateral trade between Indonesia and Vietnam grew positively in the last six years or so, increasing to $6.3 billion in 2016 from $3.3 billion in 2010. Even with such an increase, the export value of each country’s products set by the two heads of states is calculated at $10 billion.
Indonesian Finance Minister Sri Mulyani Indrawati said recently that Indonesian companies need to explore possibilities to boost exports to developing countries, including ASEAN trading partners, Iran, Nigeria, Morocco, South Africa and others. “Indonesian exporters need to think about how to export to non-traditional markets,” she said
The government, said Lukito, will support business players’ efforts to boost trade to the ASEAN region, taking advantage of the ASEAN Economic Community.
“The government will pay attention to micro, small and medium enterprises to increase competitiveness and expand their wings throughout the region,” he said.
On the sidelines of APEC, the Trade Minister held bilateral meetings with a number of trading partners, including New Zealand, Japan, Hong Kong, Australia and Papua New Guinea. The meeting was aimed at improving bilateral trade with these nations.
The meeting between the Trade Ministe and New Zealand counterpart David Parker centered on talks about the progress of the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFA) as well as a planned Joint Ministerial Commission in early 2019. The other issue that was high on the agenda was potential exports of Indonesian tropical fruits to New Zealand.
The Indonesian Trade Minister also met with Japan’s Minister for Economy, Trade and Industry Hiroshige Seko, and they discussed agreement on ASEAN-Japan Comprehensive Economic Partnership (AJCEP), including potential investment disputes that will be mutually beneficial for both countries.
The ministry also held talks with Hong Kong’s Secretary for Trade and Economic Development Edward Yau Tang Wah. They discussed the finalization of a Free Trade Agreement, Financial Services as well as the role of Hong Kong as a hub for Indonesia’s exports to East Asian countries.
As for the meeting with Australian Minister for Trade, Tourism and Investment Steven Ciobo, the discussion was focused on the IA-CEPA Agreement, while the meeting with Papua New Guinea’s Minister for Foreign Affairs and Trade Rimbik Pato focused on trade between the two countries and the campaign of PNG to support holding the APEC Summit there in 2018.
On the sidelines of APEC, the Trade Minister also held meetings and discussions with multinational companies (MNCs) including Nike, Johnson & Johnson and General Electric (GE) on potential investment and halal issues.
Indonesia has relied on exports as an effort to stimulate the country’s own economic growth facing persistently slow global economic growth. Exports to ASEAN thus represent a viable option, given lower costs and stable growth.
Written by Roffie Kurniawan, email: email@example.com