Economist: Trade Agreements Strengthen Efforts to Shift Export Markets

Director Executive of the Center of Economic and Law Studies (Celios) Bhima Yudhistira Adhinegara believes that shifting export markets to non-traditional countries can be strengthened by the realisation of Indonesia’s recent international trade agreements. Speaking in Jakarta on Friday, Bhima cited the Indonesia-EU Comprehensive Economic Partnership Agreement (IEU-CEPA) as an example, which opens opportunities for Indonesia to trade energy and plantation commodities that are environmentally friendly. “Utilising the European market through IEU-CEPA with strict emission standards presents opportunities such as green steel to plantation products that meet EUDR (EU Deforestation Regulation) requirements,” said Bhima. Furthermore, he stated that Indonesia also has other bilateral trade opportunities with non-traditional countries such as Tunisia through the Indonesia-Tunisia Preferential Trade Agreement (IT-PTA), Latin America through the Indonesia-Peru Comprehensive Economic Partnership Agreement (IP-CEPA), and Russia through the Free Trade Agreement (FTA) between Indonesia and the Eurasian Economic Union (EAEU). “The most urgent development of non-traditional export markets includes Central and South America, Russia, Tunisia, to Pacific Islands such as Solomon, Fiji, and Vanuatu,” said Bhima. Meanwhile, he also views China as a still quite potential export destination for Indonesia due to its stable economic growth and high demand in the Bamboo Curtain country. “The export market shift should preferably go to China because economic growth is still maintained at 5 percent. It remains quite solid, supported by China’s large domestic demand,” he said. In addition, Bhima suggested that Indonesia should be adaptive in developing product quality to have higher competitiveness on the global stage. “It is also recommended to diversify non-oil and gas products such as solar panel modules to cosmetic raw materials,” he said. In agreement, Director Executive of the Center of Reform on Economics (CORE) Indonesia Mohammad Faisal stated that competitiveness is the main key so that Indonesia does not lose export market potential amid the Iran war with the United States-Israel. “Shifting flagship products to regions not affected by the Strait of Hormuz route is automatically done by other countries as well. Before this market shift, basically, the supply chain shift has already happened first when the war occurs. Then it is followed by the market shift when the conflict drags on,” explained Faisal. “Of course, the most influential factor here is indeed logistics costs and the trade barriers imposed by those new markets, both tariff and non-tariff barriers. That is what determines,” he added.