Trade Agreement Encourages Export Diversification

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Wakil Menteri Perdagangan Jerry Sambuaga. ANTARA/HO-Humas Kemendag/am.
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NUSADAILY.COM – JAKARTA – Deputy Minister of Trade Jerry Sambuaga said one of the benefits of trade agreements is to encourage export diversification, both in product and regional perspectives.

“There needs to be verified both in terms of the destination country and the type of product itself, one of which is through trade agreements. The reason is that trade agreements provide incentives both in terms of tariffs and non-tariffs on a lot of Indonesian export products,” wamendag said in a webinar titled “Economic Diplomacy for National Leader” organized by Bank Indonesia.

According to Wamendag, in his statement received in Jakarta, Wednesday, there are currently 10 main export products of Indonesia that contribute more than 59 percent to the total value of Indonesia’s exports. In terms of export market, the figures also show the same thing, namely 10 export countries dominate the contribution of Indonesia’s export value with a figure of about 60 percent.

“For example, the Indonesia-Australia Comprehensive Economic Partnership Agreement (CEPA) provides a zero percent tariff on approximately 6,900 types of Indonesian products. This is also the case in other trade agreements. So, this is an opportunity for alternative products to be able to develop,” said Wamendag.

Trade agreements also open up new emerging markets and potential for Indonesia. There are two main areas that want to be developed, namely the African and South American markets. In addition, there are regions of Eastern Europe, Southeast Europe, South Asia, and the Middle East.

One of the newly completed agreements is the Indonesia-Mozambique Preferential Trade Agreement (PTA), which is expected to pave the way for new markets in central and southern Africa.

“Meanwhile, for the South American region there is Indonesia-Chile CEPA which is also proven to increase the utility of utilization of certificate of origin (SKA) significantly. Thus, it is expected that Indonesia can further penetrate the market of surrounding countries,” explained Wamendag.

Export Value Is Quite High Growth

In January 2021, quantitatively, the value of exports to several potential areas of cooperation grew quite high. Exports to South Africa grew 138.15 percent (yoy) and East Africa grew 57.7 percent (yoy).

In addition, exports to some regions that already have trade cooperation agreements also grew quite well. For Southeast Asia, growth was 10.86 percent (yoy), while Australia grew 22.77 percent (yoy).

Wamendag explained other incentives as a contribution to trade agreements for the Indonesian economy, namely increased investment in various sectors.

“The expanding market and the easier alternative products to market will also increase investor interest in various scales, both domestic and foreign investments. Thus, economic growth increases in line with the absorption of labor and the increasing welfare of the community,” he added. (lal)