Italo-Indonesian trade relations
Indonesia and Italy have enjoyed a long relationship that dates back to many years ago, reinforced by the presence of the Italian Embassy and the Italian Trade Commission (ITC), a government agency whose main purpose is to promote trade between Italy and other countries. The Jakarta ITC opened in 1981 and provides information and assistance to Indonesian companies interested in dealing with potential Italian counterparts.
The ITC represents a major point of reference for small and medium-sized Italian enterprises (SMEs) and businesspeople seeking trading partners and opportunities.
The trade balance between Indonesia and Italy had registered a surplus in favor of Italy, but in 1998 there was a strong realignment of the flow in favor of Indonesia. After rising substantially in 1996, the volume of Indonesian imports from Italy contracted slightly in 1997 and fell sharply during 1998. The fall in imports, and to a lesser extent the rise in exports toward Italy, inverted the sign of the external current account balance and generated a sizable surplus.
Indonesian exports are aided by a currency devaluation of the rupiah, but the creation of the euro -- the European Union's new single currency -- is conducive to both exports and imports, as it increases predictability and reduces currency risks associated with doing business with European companies. The euro has greatly decreased currency risks for European companies engaged in import, export and investment activities abroad.
Moreover, Asia's crises, including currency devaluation, have presented European companies with an opportunity to invest in Asian companies.
Despite the economic crisis, the Investment Coordinating Board (BKPM) approved eight Italian investment projects during 1998 for a total of US$7.3 million. The projects are carried out mostly by SMEs in the sectors of food processing, furniture, chemicals for ceramics and shoe molds. To encourage investments and joint ventures in industrial and technological sectors between Italy and Indonesia, with special emphasis on cooperation between SMEs of the two countries, an Italian Investment desk has been operating at BKPM since 1996.
Italy's capital goods are suited to the needs of Indonesian industries aimed at exploiting the country's natural resources, as well as satisfying manufacturing sectors where exports and internal consumption are equally important, i.e. the textile and garment industry, shoe manufacturing and tiles.
Indonesian entrepreneurs seeking trade opportunities with Italy can contact the ITC, Gedung BRI II, 19th floor, Ste 1901, Jl. Jend. Sudirman 44-46, Jakarta, 10210, tel: 5713560, fax: 5713561, e-mail: icejkt@indosat.net.id for information.