T

he Partnership Forum held between Indonesia and the United Kingdom last June reminds us of the modest bilateral partnership between the two countries.

During the London rendezvous, broad agreements on security, climate change, education and maritime affairs were reached. Also notable was a commitment to deepen ties in economy and infrastructure.

What does this mean for the Indonesia-UK bilateral relationship going forward? How does the current political-economic climate influence the direction of this partnership?

In the spirit of their 70-year diplomatic relationship, Indonesia and the UK should take concrete actions to strengthen their economic partnership and realize their full bilateral potential. Both sides need it, and the political momentum is here.

Despite the apparent match, trade activities between the two countries remained moderate at best. According to the Observatory of Economic Complexity, Indonesia exported US$1.8 billion and imported $1 billion worth of goods to and from the UK in 2017, less than 1 percent of its total export and total import, respectively. For the UK, these numbers mean less than 0.3 percent of its total import and total export in the same year.

A reinforced partnership between the two may change that, with several key sectors being the potential benefactors. Education is one. As championed by Investment Coordinating Board (BKPM) head Thomas Lembong, opening Indonesia’s higher education sector to foreign investment may unlock a great potential, including one of UK’s foreign direct investment to Indonesia.

Manufacturing could be bolstered, too. UK investment in domestic manufacturing may answer National Development Planning Minister Bambang Brodjonegoro’s plea for an “industrial transformation”. As Indonesia still lags behind regional peers in manufacturing productivity, the land of the Industrial Revolution could lend a hand in boosting innovation and human capital.

A handful of other sectors can be included on the list too, including energy, infrastructure and professional services. Additionally, Indonesia can shift to selling higher value-added products and services to the UK, particularly in tourism and hospitality.

Nonetheless, the prospects for a robust partnership will be influenced by the political-economic landscape enclaving the two nations.

First and foremost, Brexit will be the primary force that shapes the UK’s trade and economic diplomacy in the foreseeable future. Unfortunately, the risk of a no-deal Brexit is higher than some might expect. Prime Minister Boris Johnson has vowed to exit the European Union by the Oct. 31 deadline “do or die”. He is making unrealistic promises about the deal the UK would get, perpetuating deadlock and thereby increasing the likelihood of no-deal.

The UK Parliament is divided between a multitude of streams of Brexiteers and Remainers, who cannot seem to agree to back any deal offered under its nose. Meanwhile, the EU is not keen to reopen the withdrawal agreement and no-deal will be the default option in the absence of any other action.

A no-deal Brexit would put the UK’s economy in disarray. The country would lose about 40 trade agreements that EU member states have with over 70 countries, worth 11 percent of its total trade. This pushes the UK to ramp up trade negotiations and reevaluate its engagement strategy with the world.

Under the “Global Britain” flag, the UK attempts to connect with old friends and new allies to maintain its global clout post-Brexit. In doing so, it has signed 13 trade deals that span 38 countries. Indonesia is yet to be on the list, and we should push for it.

Indonesia has a stronger bargaining power given its huge market potential and the UK’s desperate need to find new trading partners.

While the Partnership Forum is a step in the right direction, we should follow up with a concrete trade deal that focuses on some of the key sectors discussed above.

Meanwhile, Indonesia’s existing relationship with the EU could further prop its ties with the UK by way of benchmarking. Since 2016, Indonesia and the EU have been engaged in the Comprehensive Economic Partnership Agreement (CEPA) negotiations, set to conclude this year.

The terms and standards agreed in the CEPA can prepare Indonesia for a similar trade deal with the UK, since the latter applies virtually the same standards as the rest of the EU in regard to cross-border trade.

The UK’s existing relationship with ASEAN could also serve as another launchpad. As ASEAN becomes increasingly important to the UK economy — it is now the UK’s third-largest non-EU export market after the United States and China — the UK is targeting ASEAN as a priority trade partner post-Brexit.

Indonesia, ASEAN’s largest economy, should exploit this opportunity to grease its trade talks with the UK. Last year, the UK’s then-trade minister Greg Hands stated that there was “a lot more” the country could be doing with ASEAN and that its trade with Indonesia was “quite low”. This year, the UK’s minister for Asia Pacific Mark Field confirmed London’s commitment to a stronger future partnership with the region. Indonesia should proactively seek to resume the discussion and start churning action plans.

President Joko “Jokowi” Widodo has declared his “Vision of Indonesia”, underlining the key priorities of this second term, which include infrastructure, human capital, investment and bureaucratic reform. Infrastructure and human capital are well within the UK’s forte, while the championing of investment and bureaucratic reform would lend further support to cross-border trade and investment.

Both Indonesia and the UK share the interest in fostering a stronger partnership. The next Jokowi administration seems eager to open the country for business in areas in which the UK has expertise, while the latter is seeking a lifeline to escape from its own political-economic nightmare.

Indonesia and the UK should give a new meaning to their 70-year diplomatic relationship amidst the current political-economic challenges, transforming casual amity to a productive partnership over the long haul.

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Strategy and innovation junior advisor at 3H Partners London and earned an MPA from the London School of Economics and Political Science. The below views are her own.