Indonesia and Chile agreed to accelerate the implementation of trade agreements between the two countries - Photo by TheInsiderStories

JAKARTA (TheInsiderStories) – Indonesia and Chile agreed to accelerate the implementation of trade agreements between the two countries through the Comprehensive Economic Partnership Agreement (IC-CEPA). Its projected, the cooperation agreement will take effect next August, said the representatives of the two countries in Jakarta, Tuesday (11/11).

It began with the exchange of the Instrument of Ratification (IoR) conducted by Indonesian Minister of Trade Enggartiasto Lukita along with Chilean Deputy Foreign Minister of Trade Rodrigo Yanez Benitez as an important legal procedure before the entry into force of IC-CEPA.

“The implementation of IC-CEPA is a historic momentum. Besides being the first trade agreement with the South American country, IC-CEPA will also open the door for export products in the Latin American region more easily. Chile’s geographical location will strategically to facilitate trade between Indonesia-South America,” Lukita said in his opening statement.

Chile is a long, narrow country stretching along South America’ western edge, with more than 6,000 kilometers of Pacific Ocean coastline. Santiago, its capital, sits in a valley surrounded by the Andes and Chilean Coast Range mountains. The population of the country reached almost 17,9 million by 2018.

Chile is a country that is quite proactive in international trade policy because it has 28 Free Trade Agreements (FTAs) and Partial Preferential Agreements (PPA) with more than 60 countries. Chile has signed free trade agreements (FTAs) with a whole network of countries, including an FTA with the United States that was signed in 2003 and implemented in January 2004, Lukita said.

IC-CEPA was signed by the two countries on Dec. 14, 2017, in Santiago, Chile. Both countries will get preferential rates for each other to export. After nearly 18 months of ratification in each country, on June 11, 2019, the process was officially completed by two countries.

For Indonesia, this process is carried out through the issuance of Presidential Regulation no.11 of 2019, concerning the approval of IC-CEPA. Through this collaboration, 89.6 percent of the chile tariff posts will be eliminated for Indonesian products entering the Chile market. While Indonesia will remove 86.1 percent of its tariff posts for imported products from Chile.

Indonesia’ main products that get preferences are palm oil and its derivatives, paper and pulp, fisheries, food and beverages, automotive products, footwear, furniture, jewelry, sorbitol, textile products, etc.

Meanwhile, Iman Pambagyo, Chief of the Indonesian negotiating team, explained that after the implementation of IC-CEPA was implemented, the two countries will continue trade negotiations in the service and investment sectors. For the deadline, it will be discussed further through the IC-CEPA Joint Committee which will meet according to mutual agreement.

Pambagyo added, the world economic slowdown made the government turn to another market to make export performance did not drop. Moreover, Indonesia’ biggest trading partner countries such as China, Japan and America began to reduce the consumption of imported goods.

For this reason, the government has begun to expand to new countries that have the potential to become an export market. And the “non-traditional” market that is being targeted by the government is Latin America.

“Latin America’ trade value is $1.18 billion, this is a non-traditional market that we need to work on seriously and become a priority,” he said.

Apart from Latin America, the government will also target other countries in Africa and South Asia. He hoped that in 2019 Indonesia’ export transactions could increase so that there would no longer be a trade balance deficit that overshadowed Indonesia like last year.

The government, he continued, was trying to complete a cooperation agreement whose status is ongoing negotiation and review such as Indonesia-European Union CEPA, Indonesia-Iran PTA, Indonesia-Turkey CEPA, Indonesia-Japan EPA (review), others is targeted to be completed this year. There is also an ASEAN economic community (AEC) which is targeted to be completed by 2025.

Lukita also targeting exports to Chile soar 200 percent throughout 2019. He opined, that cooperation with countries in South America including Chile and Argentina would bring great benefits to Indonesia.

Total trade between Indonesia and Chile in 2018 reached US$274 million. In January-March 2019 the amount of trade between the two countries worth of $56.1 million, with Indonesia’ export value of $34.9 million and import of $21.2 million.

Chile is Indonesia’s 55th export destination with total exports reaching $158.9 million in 2018, an increase of 0.3 percent over the previous year of $158.5 million.

Indonesia’ main export products to Chile are footwear, fertilizers, automobiles, organic surfactants, locust beans, seaweed, sugar beets, and sugar cane. While Chile’s main products to Indonesia are grapes, copper, chemical pulp, iron ore, fat and oil and its fraction of fish and marine mammals.

“It is crucial to penetrate Chile and other third-world countries in the Latin America region because Chile has dozens of FTAs [free trade agreements] with more than 60 countries worldwide,” he added.

According to him, continuing negotiations on trade cooperation with Chile has a strategic significance for Indonesia in enhancing Indonesia’s relations in Latin America, as it is a potential market among non-traditional markets. Chile is expected to become a liaison country or a hub in breaking the Latin American market.

“This is an economy we want to target,” he said.

Chile is a country that is quite proactive in international trade policy because it has 28 Free Trade Agreements (FTAs) and Partial Preferential Agreements (PPA) with more than 60 countries. Chile has signed free trade agreements (FTAs) with a whole network of countries, including an FTA with the United States that was signed in 2003 and implemented in January 2004.

Written by Lexy Nantu and Willy Matrona, Email: lexy@theinsiderstories.com