Trade Practice Challenges Still Prevalent in Indonesia: EU-Indonesia Business Dialogue
Jakarta. After launching a Comprehensive Economic Trade Agreement between the European Union and Indonesia in July, the two parties continue to discuss trade practice challenges at the sixth EU-Indonesia Business Dialogue in Jakarta on Tuesday (08/11).
According to the European Business Chamber of Commerce in Indonesia, 50 percent of EU businesses have expressed interest in investing in Indonesia within the next 2 years, but the business environment locally seems to have dissuaded potential investors.
With the mounting interest to invest in Indonesia, the EU has called for an improvement in market access conditions.
“Import procedures remain complex and burdensome and progress is sometimes hampered by a lack of transparency,” European commissioner of agriculture and rural development, Phil Hogan, said.
Hogan added that import volume restrictions, allocation of import licenses and technical barriers like transparency and sanitary measures have contributed to the challenges.
Halal certification was another highlighted issue.
“Mandatory ‘halal’ labeling is not necessary — we believe it should be optional,” he said, adding that the EU has been exporting halal products for a long time and will not accept unrealistic rules that would hinder EU trade in practice.
The commissioner urged for development of business and legally certain structures saying that it would help attract EU investors into the agri-food business, which he projects will have strong demand by 2030.
The dialogue became a platform for both business players and policy makers to find ways to improve trade.
Other than agri-foods, or foods produced agriculturally like vegetables and fruits, Hogan suggested that Indonesia explore the option of exporting nutmeg as a geographical indication product.
The next round of negotiations for CEPA will take place in January next year and the parties plan to finalize the agreement by 2019.
According to the Indonesian Chambers of Commerce and Industry (Kadin), the total trade value between the EU and Indonesia is $26.1 billion in 2015, with EU being Indonesia’s fourth largest trade partner and second largest export market.
Exports from Indonesia to the EU include machinery and appliances, textiles and footwear, plastic and rubber products. Meanwhile Indonesia imports mainly industrial products from the EU, such as transport equipment and chemical products.
Foreign direct investments from the EU reached $14.7 billion in the past 5 years, with major investments in technology, know-how and human capital.
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