Business

Indonesia wants to boost trade with SA

2018-12-09 17:00

The Indonesian government wants to convince South Africa to loosen its regulations to allow the two countries to increase trade.

So said the country’s foreign affairs department director-general Daniel Simanjuntak at a media briefing in Jakarta, the Indonesian capital, this week.

Indonesia is not included on the list of countries that are offered free visas from South Africa.

Among the issues that the Indonesian government has highlighted as a barrier to trade is the high tariffs for goods from Indonesia imported into South Africa.

Simanjuntak said the country – with a population of 264 million spanning three time zones and including more than 17 000 islands – wanted to increase its trade with South Africa.

Indonesia’s largest trade partner in Africa is Nigeria; South Africa is second.

“With South Africa we want to see more. Brazil is far away and it has more trade with Indonesia compared with South Africa.

“We are not happy yet with trade with South Africa,” he said, adding that the Asian country wants more.

He pointed out that South Africa was the only African state with which Indonesia had a strategic partnership in sub-Saharan Africa.

The relations at a political level were good but this had not translated into better trade relations, Simanjuntak said.

The country hopes to attract more trade when it hosts the Indonesia-African Infrastructure Dialogue next year in August.

It hopes the dialogue will be a forum to strengthen Indonesia-Africa cooperation in the infrastructure sector.

“We are looking forward to having infrastructure cooperation with South Africa and to establishing a preferential trade agreement [PTA]. The establishment of a PTA with the SA Customs Union, of which South Africa is part, will boost the trade between the two countries to full potential, lessening restrictions and barriers,” he said.

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Facts about Indonesia, by Graphics24

Flanked by Sinthya Roesly, the chairperson of the country’s export-import bank, EximBank, Simanjuntak said compared with the rest of the Brics member states – Brazil, Russia, India and China – South Africa traded the least with Indonesia.

South Africa has a $1.19 billion trade deficit with Indonesia.

Speaking to City Press, Roesly said although she was satisfied with the country’s trade with the continent, trade with South Africa needed to be taken up a notch and the EximBank – as one of four parastatals under the country’s treasury department – was already capable of facilitating transactions.

The country has 114 other parastatals.

Eximbank is mandated to offer finance, insurance and advisory as well as guarantees for local companies embarking on local and international projects.

The country has one of the more protected small and medium-sized enterprise (SME) sectors in the region with no foreigners allowed to wholly own small businesses in some sectors, a law that ensures the SME sector, which is the biggest employer, stays resilient.

The country also does not import much processed goods – although there are a few exceptions – with the bulk of its exports being raw material for the manufacturing sector to process.

Of the $17.2 billion worth of Indonesian exports that go to Africa, 14% goes to South Africa, which is Indonesia’s second-biggest African export destination after Egypt, with 26.1% export share.

South Africa makes up 10.2% of the $36.8 billion in imports from Africa to Indonesia, second only to Nigeria which makes up 32.9%.

Besides EximBank, Indonesia has a number of economic instruments, including an infrastructure guarantee fund that specifically guarantees and insures local public infrastructure projects that are implemented by its housing construction company.

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August 18 2019