RI to pursue deeper economic ties with Africa

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.