The exchange between both nations shows potential to continue increasing, say authorities of the Asian nation. Indonesian vehicles, spare parts, footwear and fertilizers, copper, cellulose and Chilean fishing items are the main exported items. But what appears most attractive now is lithium, essential for Jakarta's aspirations in the production of electric vehicles.
Chile was the first Latin American country with which Indonesia signed a trade agreement. Called CEPA - the acronym for Comprehensive Economic Partnership Agreement - it was ratified in 2019 and has allowed a 23% increase in trade between both nations since its entry into force.
Today, both States have together almost 8,000 products with reduced or eliminated tariffs, which include agricultural, mining and industrial items.
The total value of trade between the two countries in 2023 was more than US$485 million.
“The bilateral treaty we have shows great potential to continue increasing. Vehicles and spare parts, footwear, fertilizers are the main Indonesian exports to Chile, while Indonesia imports copper, cellulose and fishing products, taking advantage of the tariff reductions established in Cepa,” explains Muhammad Banshar, Indonesian ambassador to Chile .
His statements were made within the framework of the Indonesia–Chile business forum, held this Thursday in the South American capital.
There, around twenty authorities and executives from Indonesian firms met with Chilean businessmen to explore the purchase of products from the fourth most populated nation in the world.
The commercial exchange between both nations is not as spectacular as that which occurs with China, but Indonesia has a special preference for Chile due to the age of its relations and because the country is a kind of entry hub to the rest of South America, due to its position in the Pacific Ocean.
Furthermore, today both nations have their sights set on promoting the exchange of services, thanks to the Protocol for the Incorporation of Commercial Services, which was signed on November 21, 2022, in Jakarta.
INTEREST IN LITHIUM
One notable resource is lithium, which was called crucial to the country's aspirations for electric vehicles and batteries. While Chile has abundant lithium, Indonesia has abundant nickel, another metal necessary for electromobility, so the authorities present see opportunities for cooperation in technology, as well.
“We also have a great opportunity to create collaborations, cooperation and strategic collaborations in this type of sources that we have,” Djatmiko Bris Witjaksono, general director of international trade negotiations of the Indonesian government, tells AméricaEconomía .
At the continental level, Witjaksono also highlights the initiative of ASEAN nations to create and develop an electric vehicle ecosystem. “To achieve that, I think we can collaborate with so many other countries that are interested in collaborating with ASEAN in Indonesia,” he details.
Indonesia today acknowledges being in the process of developing an ad hoc industry for electric vehicles, starting with batteries.
BUSINESS MISSION TO INDONESIA
Chilean businessmen are interested in increasing commercial exchange, which at the moment favors Chile more.
After the pandemic, Chilean trade missions to that Asian country only took place in 2023.
“Indonesia today is the third or fourth largest country in the world, but trade between Chile and Indonesia is very low. On the one hand, it's a shame that it's so low, but on the other hand, it's a huge opportunity [to grow]. We know that the opportunity in the food sector, in the mining sector, in the service sector, is very important. Indonesia is a very strong country in mining, therefore, there is a great opportunity for the mining services that we have in Chile, to be able to export them there,” explains to AméricaEconomía Juan Carlos Domínguez, president of the Chile-Indonesia Council of the Society of Factory Development (SOFOFA).
Domínguez also highlighted the opportunities to enhance the exchange of services. “This will make it easier for Chilean companies to invest there, and for Indonesian companies to also invest in Chile,” he adds.
The executive highlights that Chile's commercial future is in Asia. “Today 50% of Chile's exports go to Asia, but Indonesia was left behind. "We are here to catch up: Indonesia is the fourth most populous country in the world, an economy that is growing, and thus, together with Vietnam, Thailand, the ASEAN countries are the key to the future," he indicated.
Both Sofofa and the Chilean government are planning a possible high-level public-private trade mission to Indonesia led by Chilean Foreign Minister Alberto van Klaveren and, eventually, President Gabriel Boric.
“I think that is what is expected with India, with Indonesia, with these markets that are the future (…) We can contribute, but it is the authorities who have to take the important steps to establish relations and give those signals that The Asian world likes them so much, in terms of presence. That a president, that a Minister of Foreign Affairs goes to Indonesia is a highly valued gesture and one that I hope we can do more frequently. We are a country that is an exporter and we need our authorities to be outside,” Domínguez emphasizes.
MODERNIZATION OF THE CEPA
This week, meanwhile, the Foreign Relations Commission of the Chilean Senate unanimously approved the projects that modernize the economic-trade agreements with Indonesia, regarding services.
The Undersecretary of International Economic Relations (Subrei) Claudia Sanhueza , who was present at the commission, highlighted the speed and seriousness with which the two chambers of Congress are reviewing these agreements. “The Services Protocol with Indonesia will allow us to boost our exports of services to that market, one of the most important and highly developed in Asia,” he noted.
The Protocol of Amendment to the Comprehensive Economic Partnership Agreement (CEPA) between Chile and Indonesia incorporates provisions on trade in services and contemplates direct benefits to Chile for professional services of different types - legal, architecture, engineering, computer science; Investigation and development; cultural, and transportation, among others. In this way, Subrei indicates that this instrument seeks to provide certainty and predictability to exports of local services to said market, as well as provide a framework to promote them.
The Indonesian delegation will travel to Argentina this weekend and the following week will be part of the APEC ministerial summit in the Peruvian city of Arequipa.
