Trade between Indonesia and Finland

Trade between Indonesia and Finland

Indonesia is one of the most important trading partners for
Finland in Southeast Asia. Finnish exports to Indonesia increased
steadily in the late 1980s and reached FIM 150 million (US$30
million). In the early 1990s, this rapid trade expansion
continued. In 1993, Finnish exports reached a record level of FIM
1,300 million ($255 million). This was not the end, however.
After several good years, Finnish companies exported FIM 2,550
million ($500 million) worth of goods to Indonesia.

The crisis which has hit Indonesia has, without doubt,
influenced the trade between the two countries. It is estimated
that Finnish exports to Indonesia may contract 30 percent to 40
percent in 1998 compared to the level in 1997. Even with lower
volumes, predominant products in Finland's exports in 1997 to
Indonesia included machinery for forest industries, various kinds
of power generating equipment and telecommunications technology.

During the 1980s, Finnish exports to Indonesia consisted
mainly of pulp and paper products. Since then, the role of pulp
and paper products has steadily decreased, and in 1997, their
contribution to Finland's exports to Indonesia was only 7
percent. The bulk of the goods exported nowadays are used by the
pulp-and-paper mills and by the plywood and wood-based panel
producers. A significant part of the business consists of big
project deliveries.

Trade between Indonesia and Finland has traditionally been in
Finland's favour. Last year, the ratio was about 4 to 1. The
largest categories in Indonesia's exports to Finland include
scrap metal, clothing and footwear. There has also been a slight
decrease in Finnish imports from Indonesia. It is likely, though,
that once the political, economic and social stability is
restored, Indonesia will again embark on a track of vigorous
growth in its exports and its imports.

The forest is important for both the Indonesian and the
Finnish economy. It is not surprising that the forestry sector is
the bedrock of the bilateral economic relations between the two
countries. Indonesia and Finland are engaged in a mutually
beneficial cooperation within the framework of the bilateral
Economic, Industrial and Technological Cooperation Agreement.
Besides regular joint-commission meetings, this framework
includes a Working Group on Forestry and Forest Industries. Other
agreements signed between Indonesia and Finland are a Tax
Agreement, an Investment Agreement and an Air Service Agreement.

There are more than 20 Finnish companies established in
Indonesia, in the form of representative offices, PT companies
and some joint ventures. Interest toward Indonesia as a business
partner has remained strong. There is no reason not to expect a
substantial increase in the number of businesses once the
Indonesian economy again starts to grow.

Reforms in investment regulations as well as the current
process of upgrading and streamlining the legislative framework
for business operations are encouraging signals for Finnish
companies.

The Indonesia-Finland Business Council (IFBC) was established
in 1995 to bring Finnish business representatives together with
their Indonesian counterparts. The IFBC seeks to promote trade
between Indonesia and Finland by organizing luncheon and
breakfast meetings with prominent speakers. IFBC also cooperates
with similar bodies established by other European Union member
states in Indonesia.