Reactivate CEPA with Chile, Indonesia Eyeing Latin America Market

Photo by Trade Ministry

JAKARTA (TheInsiderStories) – The Indonesia Government reactivated the Indonesia-Chile Comprehensive Economic Partnership Agreement (IC-CEPA), as an effort to open up international trade opportunities amid the global economic recovery.

Director General of International Trade Negotiations Ministry of Trade, Iman Pambagyo revealed, the Government of Indonesia and the Government of Chile agreed to finish the negotiation by the end of 2017. The 4th round of talks is a follow-up to the 3rd round of negotiations held on June, 15-16 in Santiago, Chile.

“For Indonesia, a very important trade agreement with Latin American countries, this will be the first agreement for Indonesia with Latin American countries, this negotiation to facilitate trade between Indonesia-Chile,” he said.

“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.

Chile is a long, narrow country stretching along South America’s 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 2016.

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.

“Chile investment overall reached US$100 thousand, we expect to see more opportunities in this region,” said Chile Director of Bilateral Economics Affairs Pablo Urria.

Performance of Indonesia-Chile trade in the last five years decreased by 12.09 percent. Nevertheless, the total trade between the two countries increased by 23.42 percent from US$101.53 million in 2016 to $125.30 million at the first half of 2017.

Indonesia’s export commodity to Chile in the first semester of 2017 was rubber footwear which reached US$11.7 million and motorcylcle and passenger cars reached $4.19 million. Meanwhile, Indonesia’s imported commodities from Chile are iron ore and concentrate reaching $23.3 million and grapes $16.02 million.

In a long-term, Indonesia aims to export more of its crude palm oil (CPO), margarine, vegetable oil, rubber, and furniture, besides its current export of footwear and automotive products to the country. Chile’s main exports to Indonesia, meanwhile, are copper and fishery feed. (EV)