Indonesia has urged its partner countries to remove tariff barriers that have curbed international trade from reaching its potential.
By
NINA SUSILO from New Delhi
·4 minutes read
Kompas/Nina Susilo
President Joko Widodo and Vietnam Prime Minister Nguyen Xuan Phuc meet on the sidelines of the ASEAN-India summit to celebrate 25 years of ASEAN-Indian partnership, New Delhi, Friday (26/1). The meeting discussed increased economic cooperation and the delimitation of the Indonesia-Vietnam exclusive economic zone.
NEW DELHI, KOMPAS – Indonesia has urged its partner countries to remove tariff barriers that have curbed international trade from reaching its potential.
President Joko “Jokowi” Widodo delivered this message in his meetings with Indian Prime Minister Narendra Modi on Thursday (25/1/2018) evening and with Vietnamese Prime Minister Nguyen Xuan Phuc on Friday (26/1). Both meetings took place in New Delhi in India. The President was accompanied by Coordinating Economic Minister Darmin Nasution, Cabinet Secretary Pramono Anung Wibowo and Foreign Minister Retno LP Marsudi.
The President said improving economic cooperation was of the utmost importance. Indonesia-India trade value is far below its true potential. “Efforts to improve our trade must be made, including by removing trade barriers,” the President said.
One of these barriers is the increased import duty on vegetable oils into India. The increase affects Indonesia’s palm oil exports. India is hoped to reconsider the policy as it is the largest importer of Indonesian palm oil. In 2016, India purchased 5.3 million tons of Indonesian palm oil valued at US$3.4 billion.
Apart from discussing trade issues, the President also reiterated his proposal to develop the Indo-Pacific region based on principles of openness, strengthened cooperation and respect on international laws.
Andalas University international relations lecturer Virtuous Setyaka said in Padang that Indonesia was India’s largest trading partner in ASEAN. In 2016, the trade value between the countries reached US$16 billion. In the next seven years, Indonesia and India have targeted to increase this trade value to US$50 billion.
This target is achievable as Indonesia and India collaborate in a variety of sectors. Virtuous said India was trying to expand its network and influence over many regions. In this plan, India places ASEAN as its strategic partner. In the past 25 years, ASEAN has been India’s most important trading partners.
Meanwhile, in his meeting with PM Phuc, President Jokowi discussed barriers in automotive trade. Vietnam’s new policy on standards and requirements of imported vehicles may negatively affect trade between the two countries.
Vietnam hopes to increase its trade value with Indonesia to US$10 billion in 2020. Currently the trade value is US$6.4 billion. Indonesia highlights the absence of any technical guideline to implement said policy.
Besides, it takes time to fulfill the requirements as stated by the new policy. Indonesia hopes Vietnam gives it time to prevent any disruptions to Indonesia’s automotive exports to Vietnam. Retno Marsudi said PM Phuc appreciated the input and that a similar message was also conveyed by Japan and the US to Vietnam.
Retno said Phuc acknowledged Vietnamese field officers may have misinterpreted the policy, leading to confusion among Vietnamese importers. Therefore, the Vietnamese government would create a guideline for the policy’s implementation.
Delimitation
The Indonesia-Vietnam bilateral meeting also discussed an exclusive economic zone (EEZ) delimitation between both countries that is still under negotiation. A resolution has yet to be achieved despite more than 10 meetings having been held on the issue.
Retno said that a certainty in EEZ borders would prevent incidents of fishermen sailing into grey areas. As a result of this uncertain EEZ borders, many Vietnamese fishermen have gone into Indonesia’s EEZ and fish there.
“Leaders of both countries have instructed their respective teams to accelerate the negotiation of EEZ borders,” Retno said.
The President also pushes for agreements in education, law, use of gas on continental shelves, rural development, strengthening maritime security cooperation and delivery of coal supply. These agreements were signed last year.
From India, President Joko Widodo has departed to Pakistan, where one of his agenda includes a discussion to strengthen a 2012 trade agreement. The Indonesia-Pakistan trade volume from January to October 2017 reached US$2.13 billion. Indonesia booked a surplus of US$1.8 billion.
With a population of 201 million and an economic growth of 4.7 percent in 2016, Pakistan is among Indonesia’s potential trade partners. The President hopes that trade between Indonesia and Pakistan will grow. Indonesia is pushing for a free trade agreement with Pakistan.
