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RI bets on trade agreements to boost exports in next five years

Indonesia is betting on bilateral and multilateral trade agreements to revive the country’s sluggish non-oil exports within the next five years

Eisya A. Eloksari (The Jakarta Post)
Jakarta
Wed, November 13, 2019

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RI bets on trade agreements to boost exports in next five years

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span>Indonesia is betting on bilateral and multilateral trade agreements to revive the country’s sluggish non-oil exports within the next five years.

Trade Minister Agus Suparmanto said trade agreements would allow Indonesia to increase its exports, as the country would generally receive easier access and lower import tariffs as part of the trade concessions.

At present, Indonesia is concluding at least 11 trade agreements and plans to ratify 13 others in the next five years. With the signing of these free trade agreements, the Trade Ministry is optimistic non-oil and gas exports will grow between 6.88 and 12.23 percent by 2024.

“I think the target is realistic amid the global economic slowdown,” Agus said at a press conference at his office in Jakarta on Nov. 8.

An expert staff member for international trade at the ministry, Arlinda, said that food and beverages, textiles and textile products, electronics, automotive parts and wood and wooden products were among the products included on the export priority list.

“The government will still focus on coal and crude palm oil [CPO] exports, as both are still top export products this year,” she said.

According to Statistics Indonesia (BPS), the country’s non-oil and gas exports from January to September fell 6.22 percent to US$114.8 billion from $122.4 billion over the same period last year. Indonesia suffered a $1.95 billion trade deficit during the first nine months of 2019, a slight decline from the $8.7 billion deficit in 2018.

“We will also keep our trade balance in check, and constantly expand Indonesia’s market by finishing international trade agreements,” Agus told the press.

He added that among the 13 trade agreements to be ratified was the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA), would be discussed by the House of Representatives on Nov. 18 for approval.

According to data from Australia's Department of Foreign Affairs and Trade (DFAT), Indonesia is Australia's 14th-largest trading partner with A$17.58 billion (US$11.78 billion) booked last year, following Singapore (A$32.24 billion), Thailand (A$25.73 billion) and Malaysia (A$24.18 billion).

Australia’s Trade, Tourism and Investment Minister Simon John Birmingham said during a recent meeting with the Indonesian trade minister that the Australian parliament would ratify the IA-CEPA by the end of this month or in early December, as both countries had reached a unanimous agreement on the trade deal.

Easier access to the Australian market is expected to spur Indonesia’s automotive and textile industry growth as well as increase exports of timber, electronics and pharmaceuticals. Meanwhile, Indonesia will import cattle and sheep.

Other than ratifications, Agus added that the ministry would also finalize several trade agreements that will be overseen by his deputy minister.

Deputy Trade Minister Jerry Sambuaga said he would prioritize the Indonesia-European Union CEPA (IEU-CEPA), which is expected to be completed by mid next year after negotiations began in 2016.

Indonesia’s non-oil and gas exports to EU member states totaled $10.69 billion from January to September 2019, a 17.5 percent slump from the same period last year, according to the BPS.

“Our other priorities are the Morocco preferential trade agreement [PTA], Tunisia-PTA, Bangladesh-PTA as well as the Turkey-CEPA,” Jerry said, stating that all parties were strategic partners to Indonesia.

During the conference, the trade minister also stated that he planned to increase exports of goods and services by around 4.5 to 8.63 percent, ensure food price inflation remained at less than 3 percent and implement import controls that only prioritized materials for export and investment purposes.

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