In the country’s pursuit to fulfill its potential of becoming one the biggest economies in the world, Indonesia has actively sought to tap into potential and non-traditional markets and develop stronger relations with other emerging economies. (Photo courtesy of the Ministry of Foreign Affairs)
Indonesia Forges Stronger Path to Boost Relations With Africa
APRIL 16, 2018
Jakarta. In the country’s pursuit to fulfill its potential of becoming one the biggest economies in the world, Indonesia has actively sought to tap into potential and non-traditional markets and develop stronger relations with other emerging economies.
To that end, Indonesia hosted the inaugural Indonesia-Africa Forum (IAF) on April 10-11 in Bali, where Indonesian stakeholders and their African counterparts convened to explore economic opportunities and strengthen existing partnerships.
"If Indonesia and Africa are successful in our cooperation, then we can tell the world that cooperation among emerging economies can also be achieved," Vice President Jusuf Kalla said during his opening speech at the forum.
In 2017, Indonesia recorded $8.84 billion in trade volume with the continent, an increase of around 15 percent from 2016.
Indonesia also recorded robust bilateral trade growth with a number of countries in Africa last year, including with Liberia, Comoros and Gabon, at 284 percent, 260 percent and 215 percent respectively.
Changes over the past decade have transformed the African continent into a growing market for investment and infrastructure. While the United States, the United Kingdom and France are still the major contributors to Africa’s foreign direct investment (FDI) inflows, China, India and Italy have been making strides in their investments in recent years.
In 2015, China invested $35 billion in Africa, almost triple the amount the country invested in 2010, according to the United Nations Conference on Trade and Development (UNCTAD).
Examining Indonesia-Africa Relations
At the forum, Trade Minister Enggartiasto Lukita highlighted that relations between Indonesia and Africa first began as early as the 17th century.
"Our relations can be traced back to 1652, when a group of people from what is known today as the Island of Java landed on the beach of Cape of Good Hope [in present-day South Africa]," Enggartiasto said.
In modern history, Indonesia’s ties to Africa can be traced to the 1955 Asia-Africa Conference in Bandung, West Java, which was the first large-scale meeting between Asian and African states. That conference helped pave the way for Indonesia, under former President Soekarno, to solidify itself as a pillar of the non-aligned movement.
Relations were further strengthened in 2005, with the establishment of the New Asian-African Strategic Partnership (NAASP). According to the Indonesian Ministry of Foreign Affairs, NAASP is an important forum for cooperation among countries on the two continents.
At the Group of 20 (G20) Summit in Hamburg in 2017, President Joko "Jokowi" Widodo expressed Indonesia’s interest to transform these bonds into stronger economic ties.
"We want to transform political ties that we have built since 1955 into concrete economic ties by promoting investment, reducing and eliminating trade barriers, and promoting technical cooperation," Jokowi said.
The commitment is enshrined in Indonesia’s foreign policy priorities, which highlights the country's eagerness to advance cooperation with Africa.
"Indonesia wants to be part of developments in Africa and likewise, Indonesia wants Africa to be part of developments in Indonesia," Foreign Minister Retno Marsudi said during her remarks at IAF.
In 2016, the African region maintained its position as the world’s second-fastest growing economy, with 3.5 percent growth last year. The International Monetary Fund expects this growth to reach 4.3 percent by 2020.
Africa’s younger generation – those below the age of 25 – makes up 62 percent of the total population. In addition, the African middle class of around 330 million reportedly has high purchasing power.
More than 30 Indonesian companies have invested in Africa so far, including textile producer Indorama and pharmaceutical company Kalbe Farma.
An example of flourishing trade relations with Africa is perhaps best shown through the popularity of Indomie instant noodles in countries like Nigeria, the most populous country on the continent. The manufacturer, Indofood Sukses Makmur, has six plants in Africa, including in Egypt, Sudan and Kenya.
Indonesia has a number of exports to the continent, including palm oil, processed food and beverages, garments and soaps.
From Africa, Indonesia mainly imports crude oil, cotton, cocoa beans, pulp and chemicals for fertilizers and industries.
"Let us join hands in building Indonesia and Africa, and create a more just and prosperous world," Kalla said.
Nearly 600 delegates, comprising of government officials and members of the private sector from Indonesia and 46 African countries, as well as international organizations, attended IAF.
The event, which was aimed at providing space for relevant stakeholders to forge partnerships and increase cooperation, saw the signing of various business deals totaling more than $1 billion.
Furthermore, the Foreign Affairs Ministry said in a statement that the forum also recorded 11 business announcements, with a potential worth around $1.3 billion.
"Indonesia and countries in Africa have agreed to intensify our economic and trade diplomacy, and strengthen Indonesia’s presence in Africa," Retno said.
Participants identified energy, infrastructure and strategic industries as some of the priority sectors, the minister added. Relations will also be strengthened in technical cooperation, capacity building, education and through the development of competitive export credit facilities.
Indonesia also plans to host the Indonesia-Africa Infrastructure Dialogue in 2019.
According to a statement issued by the Trade Ministry, Indonesia will soon start discussions on preferential trade agreements (PTA) with Mozambique, Tunisia and Morocco.
IAF saw a breakthrough in improving connectivity between Indonesia and the continent, with the announcement of Ethiopian Airlines’s plans to start operating a direct flight between Jakarta and Addis Ababa, Ethiopia, as reported by state news agency Antara.
"Soon after we finalize the regulations, we will start operating a direct flight to Jakarta," Ethiopian Airlines president director Tewolde Gebremariam said on the sidelines of IAF.
He added that Addis Ababa connects travelers to 58 other destinations in Africa.
On the sidelines of the forum, the Foreign Affairs Ministry signed a memorandum of understanding with Indonesia Eximbank as part of an effort to maximize Indonesia’s economic diplomacy, including to the African continent, which is at the top of the list of targeted non-traditional markets.
As Indonesia is amid negotiations for cooperation agreements at the bilateral and regional level, a partnership with Eximbank is expected to help implement those future cooperation deals.