RI may consider Iran barter deal

Indonesia will study a possible proposal from Iran, which is the second-largest economy in the Middle East and North Africa region, for a bilateral barter trade deal, following recent economic sanctions imposed on Iran by Western countries.

The United States and the European Union have imposed financial sanctions on Iran in a move to pressure it to drop its alleged nuclear weapons development program.

Although the measures do not prohibit other countries from selling staple foods to Iran, they make international financial transactions more difficult.

Trade Minister Gita Wirjawan said on Friday that the government would consider the proposal for a trade deal once it was received.

Commodities traders have said that Iran has been offering gold bullion in overseas vaults and tanker loads of oil to secure food for its people, but cannot give specific details on the deals, Reuters reported.

“So far, we have not accepted an official barter trade proposal from the Iranian government,” Gita said.

“But if there is one, the government would surely study it before agreeing,” he said, adding that Indonesia would ask for gas instead of oil should such a proposal be made.

Iranian Ambassador Mahmoud Farazandeh said on Friday there were more than 1000 commodities that could be exchanged with Indonesia.

“Indonesia and Iran complement each other [in terms of trade]. We are ready to supply oil and gas,” said Farazandeh.

“Insya Allah, relations between the two countries will not be interrupted. With the support of Indonesian people, our relationship will continue to expand.”

Indonesian trade officials have said that past experiences showed that barter trading could be complicated, as it entailed private sector commodities being exchanged under a government to government arrangement.

Indonesian Palm Oil Producers Association executive director Fadhil Hasan said palm oil barter trading was difficult.

“The process and mechanism are difficult and normally it is carried out by the government. Palm oil is a commodity in high demand and exporters would choose simpler options,” he said.

Fadhil said that Indonesia’s palm oil export to Iran was relatively small at 41,000 tons, compared to its total export of 15.6 million tons in 2010.

Indonesia has in the past conducted barter trading under government arrangement, such as in 2003 and 2004, when it exchanged palm oil and rubber for Russian jet fighters and civilian planes for Thai rice.

Indonesia–Iran bilateral trade stood at US$1.73 billion last year, up 65 percent from 2010.

Indonesia exports to Iran reached $726.56 million, comprising commodities such as paper, palm oil and tea. Imports were valued at $1 billion, and were mostly oil and gas products.

Indonesia, the world’s most populous Muslim majority country, carries out trade transactions through third-party countries, such as the United Arab Emirates, as it has no banking ties with Iran.