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Indonesia, Chile add services deal to trade agreement
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ndonesia and Chile have added a services trade protocol to their bilateral trade agreement as the two emerging economies brace for a potential global recession.
At a signing ceremony on Monday, Indonesia’s Trade Ministry said the Indonesia-Chile Comprehensive Economic Partnership Agreement (IC-CEPA) could become a gateway to South America for Indonesian export goods.
“Chile has competitive human capital, is one of the developed countries in South America, and I think its economy is the best among countries [of that region],” Trade Minister Zulkifli Hasan told participants at the event in Jakarta.
From 2019 to 2021, the trade volume between Indonesia and Chile increased by around 54 percent to US$424.6 million.
The minister called for a further increase to $1 billion over the next two or three years and said Chile could become an export “expansion hub” to the markets of Argentina, Ecuador, Peru and Colombia.
“The potential is very big. Because they have money, they can pay [for our export goods],” Zulkifli added.
Striving to be a developed country by 2045, he said, Indonesia should expand its export markets and “dominate” the world market instead of only the traditional market of Europe, the United States and Asia.
Given to the slow growth and even possible recessions in Western countries, Zulkifli said, it was necessary to find alternative export markets.
He said Indonesia needed 7 percent annual GDP growth to become a developed country by 2045, which required a vast expansion of exports to Latin America, Africa, the Middle East, Central Asia, Eastern Europe and South Asia.
“There is no other choice, we have to expand our market [...] we are still in the process,” Zulkifli continued.
Speaking at the same event, Chilean Deputy International Economic Relations Minister Jose Miguel Ahumada said the newly signed protocols would allow Indonesia and Chile to use the IC-CEPA as an "import and export platform" to each respective region.
He called for a "substantial step forward" in the implementation of this protocol, which included contemplating greater access of professional services and the movement of people, instead of just focusing on trade in services.
"The fact that we have already achieved four very productive rounds in such a short time clearly shows our mutual commitment toward complementing this process, reflecting our long and fruitful 57 years of bilateral relationship," Ahumada said.
Signed in Santiago in December 2017 and taking effect in August 2019, IC-CEPA is the only CEPA-level agreement between Indonesia and a Latin American country.
The IMF predicts that, in 2023, India's GDP will increase by 6.1 percent, while Sub-Saharan Africa and the Middle East-North Africa region are expected to grow by 3.7 and 3.6 percent, respectively. The Caucasus and Central Asia are predicted to experience a 4 percent increase.
China is expected to experience the highest economic growth in East Asia next year with a 4.4 percent increase. South Korea and Japan are seen to follow with 2 and 1.6 percent growth, respectively.
The Fund predicts that the GDP of the United States and the continent of Europe will increase by 1 and 0.5 percent, respectively, in the coming year.
