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JAKARTA: Indonesia hopes to reach a broad economic pact with the United Arab Emirates that will open more markets to the country’s exports in the Gulf, Indonesia’s trade ministry said on Tuesday, as officials aim to ratify the deal by November.
Indonesia and the UAE signed a comprehensive economic partnership agreement in July after launching talks in September 2021 aimed at removing tariffs and promoting investment. The agreement is Jakarta’s first with a Gulf country and Abu Dhabi’s first with a Southeast Asian country.
Bilateral trade reached about $4 billion last year, up nearly 38 percent from $2.9 billion in 2020, according to Indonesia’s trade ministry.
The deal is still subject to approval by Indonesia’s House of Representatives, which met this week with Trade Minister Zulkifli Hasan to discuss the process in detail.
“IUAE-CEPA will benefit Indonesia as the UAE will be a hub for Indonesia to tap into a new and very large market,” Hassan said in a statement on Tuesday.
He went on to say that through the agreement, the country’s goods, from jewellery and agricultural products to products for SMEs, can enter Africa, the Middle East, Central Asia and Eastern Europe.
Hassan said the agreement is expected to increase Indonesia’s exports to the UAE by an average of 7.7 percent a year.
The trade ministry said the agreement eliminates about 99 percent of existing tariffs and includes a commitment to increase Indonesia’s services exports to the UAE by 6 percent and mutual recognition of each country’s halal certification.
“We hope that Indonesia will ratify IUAE-CEPA ahead of the planned meeting between the President of Indonesia and the President of the UAE in Solo on November 17, 2022,” Hassan said.
Yanuar Rizky, economist and chairman of Jakarta-based research firm Bejana Investidata Globalindo, told Arab News that the trade pact appears to be part of the Indonesian government’s strategy to attract more investment from the UAE.
“As far as I know, Indonesia hopes that as the tariffs are cut and become a trading hub, the UAE’s investment in Indonesia will increase,” Rizky said.
“This is what the Jokowi government continues to pursue,” he added, referring to Indonesian President Joko Widodo’s popular nickname.
Rizki said the effort was in line with current efforts to attract foreign investors for the development of a new $32 billion capital city in Borneo, which Japan’s SoftBank withdrew its support for earlier this year.
Abdulla Salem Obaid Al-Dhaheri, the UAE ambassador to Indonesia, said in March that the UAE will commit to invest in new capital in Indonesia through the existing US$10 billion funding from the Indonesian Investment Agency.
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