RI to pursue deeper economic ties with Africa

Zakki P. Hakim, The Jakarta Post, Jakarta

Indonesia must learn from China, Japan, India and Malaysia and take advantage of the African market despite its small size and Indonesia's limited capabilities as regards developing new markets.

"Trade with Africa has not been a priority in the past given the small volume of trade, lack of information and familiarity, distance, lack of direct transportation links and lack of supporting facilities, such as trade financing," Minister of Trade Mari E. Pangestu told The Jakarta Post on the sidelines of the Asia-Africa Business Summit on Thursday.

She said that given these circumstances, the tendency had been to focus on traditional markets, such as North America, Europe and Japan.

But the government had started to facilitate a partnership with the private sector to overcome the obstacles by providing more information, conducting market intelligence and encouraging the pooling of exports in order to produce a sufficient volume of trade.

According to Mari, trade volumes with Africa were relatively small and most goods were shipped through Singapore or the Middle East. A lot of trade also involved individual African traders.

"If we want to increase our trade, we will have to consider a number of gateways so as to penetrate the southern, West or North African markets. We must also have more promotion and information, and work on export financing and transportation links," she said.

China, Japan, India and Malaysia were the best prepared to take advantage of the Asia-Africa bridge as they had laid the groundwork for cooperation.

Mari said local businessmen were neither disinterested nor incapable, but due to limited resources Indonesia preferred to prioritize the bigger, traditional markets.

She elaborated that the constraints did not only consist of limited human resources, but also time and funding.

"To penetrate a new market, you have to spend time and money, and have someone on the ground in the evolving market, who understands how to promote the products and find buyers," she said.

President Susilo Bambang Yudhoyono in his opening speech to the Business Summit urged nations from both continents to work on, among other things, trade and investment facilitation programs focusing on the smooth flow of goods, services, people and investment.

"By coordinating our policies and our procedures, we can impart new momentum to the positive socioeconomic and political developments taking place on our two continents. Thus, we can radically alter the pattern of global trade and investment flows, making the Indian Ocean an exceptionally busy two-way street of economic cooperation," he said.

Indonesian Chamber of Commerce and Industry (Kadin) chairman Mohamad S. Hidayat said earlier that the Asian-African Business Summit was aimed more at familiarizing members of the private sector from the different countries with each other.

"Then, it will depend on the political will of each government in facilitating its private sector to develop intercontinental trade," he said.

The Ministry of Trade sees Egypt, South Africa, Morocco, Libya, Tunisia and Nigeria as among the most important nations with which Indonesia should develop stronger ties.

Although the balance of bilateral trade with Libya was relatively small, standing at US$7.4 million in 2003, the country has offered its Mirasata industrial and trade zone to Indonesia to use as a door for expanding exports to the whole North Africa region.

Tunisia has also offered to serve as a hub from which Indonesia can penetrate the 26 North African countries, although it is more likely that Indonesia would take advantage of the country's trade preference facility in exporting to the wealthy European countries.

South Africa has also offered a similar strategic arrangement, through which Indonesia could boost its trade throughout the Southern Africa Customs Union (SACO). The SACO grouping could serve as Indonesia's gateway to penetrate the Southern African region, which is home to 12 countries.

Indonesia is now pursuing bilateral preferential trade agreements with Egypt, Tunisia and Morocco, while at the same time studying the cost and benefits of an FTA with South Africa.

Mari is scheduled to lead a trade delegation to visit the Middle East and a number of African countries, including Egypt, in mid-June.