JAKARTA – Indonesian authorities say they are optimistic about growing the country’s exports to the Middle East following the signing of a new broad economic agreement with the UAE.
Indonesian Trade Minister Zulfikli Hasan and UAE Economy Minister Abdullah bin Touq Al-Marri signed the Comprehensive Economic Partnership Agreement in Abu Dhabi on Friday, following the commencement of discussions last September aimed at removing tariffs and increasing investment between the two countries.
According to data from Indonesia’s Commerce Ministry, bilateral trade volume reached about $4 billion in 2021, representing a roughly 38 percent growth from the previous year, when it was worth $2.9 billion. This is Indonesia’s first agreement with a Gulf country, and the UAE’s first with a Southeast Asian country.
The new agreement is estimated to increase Indonesian exports to the UAE by 54%, or $844 million, over the next ten years, since it eliminates around 94 percent of present levies. Jewelry, palm oil, and motorized cars are among Indonesia’s key exports to the UAE.
“This agreement will be Indonesia’s entryway to the UAE, which is a hub to increase exports to non-traditional export destinations in the Gulf, Middle East,” Hasan said in a statement issued on Friday.
The agreement also includes provisions on tourism, intellectual property rights, and reciprocal recognition of halal certification in each country.
The full language of the agreement was not immediately made public, and it still needs to be accepted by Indonesia’s House of Representatives, which may take months. Similar agreements have been made by Indonesia with Australia in 2019 and South Korea in 2020.
Indonesian President Joko Widodo, who attended the signing with UAE President Sheikh Mohamed bin Zayed Al-Nahyan as part of the former’s visit to Abu Dhabi, praised the two nations’ developing relations.
“Amid the challenging situation that we face now, we continue to work together to boost relations between our two countries,” Widodo said, as quoted in a statement issued by his office on Friday.
Diana Dewi, chairperson of the Indonesian Chamber of Commerce and Industry’s Jakarta chapter, believes the new agreement will benefit Indonesian business players.
“This agreement will be an entry point for Indonesian businesses to increase exports to the UAE,” Dewi told Arab News.
“UAE is also a hub to enter the European market,” she added.
According to Bhima Yudhistira, president of the Jakarta-based Center of Economic and Law Studies, the broad accord could open up new opportunities for Indonesia.
“(The) UAE is a key export hub for the Middle East and North Africa.” “The UAE’s automotive advancements are highly promising, and they will demand spare parts and components from Indonesia,” Yudhistira added.
However, it presents new challenges for Southeast Asia’s greatest economy, he added.
“Because the UAE market is a high-income group, it is difficult to break through in terms of quality and product competition.”