T

urkey at the western end of Asia and Indonesia on the belly of the redefined East Asia have in recent times accomplished remarkable achievements without much ado.

Both recovered from the global financial crisis of 2008-2009 faster than many other economies and are currently enjoying a promising acceleration of growth. The quick recovery could not have been a complete random occurrence.

Turkey and Indonesia must have benefited from the painstaking but successful initiatives on macroeconomic stabilization. With the current moderate rates of inflation and appreciating lira and rupiah at a moderate pace of growth, Turkey and Indonesia are entering the narrow club of stability-conscious countries, leaving to history uncontrolled inflation and devaluation. Yet few Indonesians have cemented a secure place for Turkey in their hearts and vice versa.

Turkey-Indonesia relations are limited in terms of bilateral flows of trade in good and services, flows of capital and flows of people for business and otherwise. It is even less visible than what is commensurate with statistical numbers, not to speak of the places Turkey and Indonesia occupy separately in the world economy.

Turkey-Indonesia relations are overshadowed by the Indonesian perspective of the breathtaking rise of two Asian giants: China and India. Turkey, on its part, is strongly oriented toward Europe in general and the joining of the European Union (EU) in particular. Europe is the Turkish preoccupation of modern times, outshining Indonesia. Yet Turkey is anything but trivial in the world economy.

With a population of 74 million and a workforce of 26 million, Turkey had a GDP of US$618 billion in 2009, a little larger than that of Indonesia. On a per capita basis, an average Turkish worker had an income of $8,500 in 2009, much higher than the average Indonesian.

Turkey’s 2010 imports of goods in value reached $185 billion, or significantly higher than Indonesia. Turkey is by no means a trade dwarf. It has gained competitiveness in a wide range of products, including fashion goods, electrical products and automotive products. What is more, Turkey is able to balance its large goods deficit with strong exports in construction services, financial services and, above all, tourism.

Pilgrims know very well how rich Turkey is endowed with historical heritage, including sites of early dispersion of the Abrahamic religions. Generating foreign exchange revenue of $21 billion, Turkey hosted no fewer than 28.5 million tourists in 2010, an envious number for the tourism communities of Indonesia.

For simple commercial reasons, Turkey-Indonesia relations deserve to be elevated to a level that at least does justice to the status of both countries as mid-size economies and members of the G20. Ways and means need to be found to create a tailwind behind their bilateral relations. Such a tailwind could consist essentially of three mutually reinforcing elements: improvement in market access to trade in goods and services as well as to investment, facilitation of trade and investment and capacity building. The three elements resemble a “tripod”.

Under current circumstances, market access to trade and investment can certainly be improved in pragmatic ways. However, Turkey is bound in a customs union with the EU and is able to negotiate market access with third countries only in respect to agriculture and products under the European Coal and Steel Community (ECSC).

The two categories make up only a small fraction in bilateral Turkey-Indonesia trade. A comprehensive economic partnership agreement between Indonesia and the EU would, however, open the gate for comprehensive removal of barriers to trade in goods and services between Turkey and Indonesia. Such an agreement is being studied, but a long process will have to be undergone before such an agreement comes into being.

Facilitation and capacity building, or cooperation in short, may not be a substitute for market access improvement. However, they can produce significant impacts as reflected in, among other things, occasional surges in bilateral trade.

More exchanges of information, more trade and investment missions on both sides, more visits of politicians such as the current visit of the Turkish President Abdullah Gul, are bound to raise interest in bilateral relations. Knowing more about each other can be expected to prompt traders and investors from both Turkey and Indonesia to discover each other.

The writer is a professor of Economics at Prasetiya Mulya Business School.