Jakarta: Indonesian officials have said they look forward to boosting the country’s exports to the Middle East after signing a new comprehensive economic deal with the United Arab Emirates.
Indonesia’s Trade Minister Zulfiqli Hassan and UAE Economy Minister Abdullah bin Touq Al-Marie on Friday signed the Comprehensive Economic Partnership Agreement in Abu Dhabi, following talks between the two countries last September aimed at eliminating tariffs and boosting investment. Signed.
According to data from Indonesia’s Ministry of Trade, bilateral trade volume reached about $4 billion in 2021, representing an increase of about 38 percent over the previous year, when it was valued at $2.9 billion. This agreement is Indonesia’s first with a Gulf country and the UAE’s first with a Southeast Asian nation.
The new agreement is expected to increase Indonesian exports to the UAE by 54 percent, or about $844 million, over the next 10 years after the agreement comes into force, as the agreement wipes out about 94 percent of existing tariffs. Indonesia’s main exports to the United Arab Emirates include jewelry, palm oil, and motorized vehicles.
“The agreement will be Indonesia’s gateway to the United Arab Emirates, which is a hub for increasing exports to non-traditional export destinations in the Gulf, the Middle East,” Hassan said in a statement on Friday.
The agreement also includes chapters on tourism, intellectual property rights and mutual recognition of each country’s halal certification.
The full text of the deal was not immediately published, and the agreement still needs to be approved by Indonesia’s House of Representatives, which could take several months. Indonesia has signed similar deals with Australia in 2019 and South Korea in 2020.
Indonesian President Joko Widodo, who signed with UAE President Sheikh Mohamed bin Zayed Al-Nahyan as part of an earlier visit to Abu Dhabi, also lauded the improvement in relations between the two countries.
“Amidst the challenging situation we face today, we continue to work together to promote relations between our two countries,” Widodo said in a statement issued by his office on Friday.
Diana Davy, president of the chapter of the Indonesian Chamber of Commerce and Industry in Jakarta, said the new deal could be helpful for Indonesian business players.
“The agreement will be an entry point for Indonesian businesses to increase exports to the UAE,” Davy told Arab News.
“UAE is also a hub for entering the European market,” she said.
The comprehensive agreement could open up new possibilities for Indonesia, Bhim Yudhishthira, president of the Jakarta-based Center of Economic and Law Studies, told Arab News.
“(The) UAE is an important export hub for the Middle East and North Africa. The UAE’s growth in the automotive sector has great potential and will require spare parts and components from Indonesia,” Yudhishthira said.
But it also presents new challenges for Southeast Asia’s largest economy, he said.
“It is a challenge to stand out from the UAE market with respect to quality and product competitiveness as the UAE market is a high-income group.”