UAE-Indonesia to increase annual bilateral trade to $10 billion

The UAE signed its third Comprehensive Economic Partnership Agreement (CEPA) with the Republic of Indonesia on July 1. Following the partnership agreements with India and Israel, the CEPA with Indonesia is designed to increase annual bilateral trade to $10 billion within five years, state news agency WAM reported.

The agreement removes trade barriers on a wide range of goods and services, creating new opportunities for UAE exporters.

UAE President His Highness Sheikh Mohamed bin Zayed Al Nahyan witnessed the signing of the UAE-Indonesia CEPA alongside his Indonesian counterpart President Joko Widodo in Abu Dhabi on Friday.

The agreement was signed at the Al Shati Palace in Abu Dhabi by Abdullah bin Touq Al Marri, Minister of Economy, and Zulkifli Hasan, Minister of Trade of Indonesia.

Sheikh Mohamed said, “Indonesia is one of our closest strategic allies. Our nations have worked together in the spirit of cooperation and unity for decades to promote social and economic development and unlock opportunities for our people.”

He added, “It is worth noting that Indonesia was the first nation with whom we began CEPA negotiations, and we very much welcome the new, more prosperous chapter in our partnership that promises to deliver.”

The UAE and Indonesia launched CEPA negotiations in September 2021 under a shared vision to expand economic opportunities, drive the post-Covid recovery and mark a new phase of strategic cooperation.

"Not only is it my hope that this agreement creates a new platform for cooperation, investment and knowledge transfer, but it also offers us new tools to navigate future challenges and opportunities together. Like all our new trade deals, this is part of a dynamic plan to build a network of trade alliances with some of the world’s fastest-growing economies. This will set us on the path to prosperity outlined in our Projects of the 50 initiative that aims to make the UAE a truly global business hub,” he stated.

President Widodo stressed that the agreement reflects an ambitious leap in cooperation between the two countries. He also expressed his happiness with this crucial economic agreement, which is expected to help double the value of bilateral trade in the coming years.

Terms of the trade deal

Under the far-reaching trade deal, over 80 per cent of UAE exports will gain immediate duty-free access to Indonesia. The agreement also can potentially increase the total value of trade in services between the UAE and Indonesia to $630 million by 2030.

Streamlined customs procedures and an emphasis on digital trade will make it easier for UAE companies to do business with Indonesia, which is set to grow 5.4 per cent in 2022.

The CEPA will lead to increased development and new opportunities for the growing Islamic economy, estimated to be worth $3.2 trillion by 2024. It will also accelerate more than $10 billion of investment projects in priority sectors such as agriculture, energy and infrastructure, particularly logistics while encouraging future cooperation in tourism, entrepreneurship and healthcare.

50,000 new jobs to be created: Dr Thani bin Ahmed Al Zeyoudi

Dr Thani bin Ahmed Al Zeyoudi, Minister of State for Foreign Trade, affirmed that the UAE-Indonesia CEPA would reduce and cancel tariffs on 99 per cent of traded goods and streamline relevant procedures and laws to help boost trade exchanges between the two nations.

Dr Al Zeyoudi said that, by 2030, the CEPA is expected to contribute around $4.6 billion to the GDP and create around 50,000 high-skilled jobs.

He added that the UAE-Indonesia CEPA includes cooperation in various sectors, including halal food, Islamic fashion, pharmaceuticals, and other Sharia-compliant sectors.

Moreover, the Small and Medium Enterprises (SMEs) in the agriculture sector and many industries that use petrochemicals, which employ a large number of people, will be the immediate beneficiaries of this CEPA, said Husin Bagis, the Indonesian ambassador to the UAE.

“Increased business and new opportunities for SMEs will translate into economic prosperity for their employees and open up new job prospects,” he said.

Of the total imports from the UAE to Indonesia, 70 per cent constitute oil and gas. Of the remaining 30 per cent, a huge chunk is petrochemicals, the main ingredient of plastic products. Other imports are dates, steel and aluminium etc., Bagis stated.

Key facets of the UAE- Indonesia CEPA

Signing of Memorandums of Understanding (MoU) and protocols

• Abu Dhabi