JAKARTA (TheInsiderStories) – The Indonesian Trade Ministry said it will settle major trade agreements such as Regional Comprehensive Economic Partnership Agreement (RCEPA) with European Union (EU), Regional Comprehensive Economic Partnership (RCEP) and other free trade agreements (FTA) in 2016, said one senior official.
The launch of RCEPA has been delayed since 2012 because of several issues, including tariff reductions, service liberalization and restrictions on foreign ownership. Currently, the EU is in the process of negotiating trade agreements with several ASEAN countries.
Bachrul Chieri, the director general of international trade cooperation at the Trade Ministry told The Insider Stories that once the RCEPA with EU is in place, Indonesia could boost its exports by $7 billion to the EU region. In 2014, total export between two countries recorded 24 billion euro ($26.93 billion) in which Indonesia enjoyed a trade surplus of 4.9 billion euro, according to Trade Ministry data.
Bachrul said Indonesia’s fisheries products, among various exported goods, were currently lacking competitiveness because of high import duties totaling 22.5 percent charged by the EU, while other ASEAN member countries pay zero percent.
He added the RCEP, which would create one of the world’s largest free-trade zones between 10-member ASEAN and its major trading partners such as Japan, China and Australia, will likely be finalized in the middle of next year. Bachrul said. the RCEP would cover 40 percent of annual global trade.
The government has started talks on the FTAs since 2012, but most have been delayed due to disagreements over tariff reductions, limitations on foreign ownership, and service liberalization.
President Joko Widodo has ordered his economic ministers to review and revitalize all existing FTAs and upcoming negotiations to improve Indonesia’s international trade. Among the FTAs and CEPAs in the pipeline are including those with Japan, Australia, Chile, the EU, Pakistan, India, Iran, South Korea and Turkey that have been ongoing for several years. These agreements mean that Indonesia has FTAs with trading partners that account for about 67 percent of Indonesia’s total trade with trading partners.
Indonesia’s exports in the January-to-August period went down by 13 percent to $102.52 billion compared to the same period last year, while imports declined 19 percent to $96.3 billion, according to the Central Statistics Agency.
Boost exports to China
Director General of National Export Development at the Trade Ministry, Nus Nuzulia Ishak, said in a press statement released on Tuesday, despite the global economic slowdown and the depreciation of Chinese Yuan, the ministry remains optimistic about the Chinese market for Indonesian exports.
On its part, the ministry will promote Indonesian commodities in the China-ASEAN Expo (CAEXPO) 2015 and will set up a distribution center called the House of Indonesia on Sept. 17 in Nanning International Convention and Exhibition Center China to boost export to the largest population country in the world.
As many as 36 business agents engaged in food, footwear, textile and textile products, furniture, house decorations, handicrafts, cosmetics and spa, tobacco and jewelry industries will display their products at the House of Indonesia.
China is Indonesia’s main trading partner as well as the biggest destination of Indonesian exports, with the overall trade value reaching $48.2 billion in 2014, accounting for more than a quarter of Indonesia trade with the rest of the world.
Indonesia-China trade grew by an average of 6.7 percent in each of the past five years, with Indonesia recording a deficit of $13 billion in 2014. (*)
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