Italo-Indonesian trade relations

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.