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On 17th December 2013, APINDO’s National Executive Council (DPN) in cooperation with the EU Delegation organised and carried out a socialisation program on the topic of the Indonesia-EU Comprehensive Economic Partnership Agreement (CEPA) in Batam. The event was led by APINDO to increase awareness of the prospect of a CEPA being finalised, and has been held in locations across the country as part of the Advancing Indonesia’s Civil Society in Trade and Investment (ACTIVE) program. To date, APINDO and the EU Delegation have hosted similar discussion forums in Surabaya, Pontianak, Medan and Makassar.
In his speech, APINDO Chairman Mr Sofyan Wanandi explained that the primary purpose of the socialisation program is to introduce the CEPA as a new initiative to reinvigorate economic ties between Indonesia and the EU. Moreover, through events such as the one held in Batam, APINDO seeks to gather recommendations from an array of different business sectors in regards to the implementation of the CEPA as well as gain a better understanding of the potential opportunities and challenges that may arise.
“These recommendations will be reported to the government for consideration in CEPA negotiations with the European Union,” said Mr Wanandi. “By considering input from businesses, the finalised CEPA will benefit Indonesian companies, thus ensuring that we avoid a negative impact similar to that which occurred in the aftermath of the ASEAN – China Free Trade Agreement.”
The EU Ambassador to Indonesia, Brunei Darussalam and ASEAN, HE Mr Olof Skoog voiced similar sentiments. “Strengthening trade relations with the EU is a win-win situation because both parties have complementary economies. The CEPA will boost trade through increased market access, in addition to facilitating further EU investment in Indonesia with the introduction of a more transparent and predictable regulatory framework.”
In 2012, Indonesia enjoyed a trade surplus of EUR 5.7 billion. The EU was also the second largest source of investment in Indonesia. However, without a finalised CEPA, Indonesia risks falling behind its ASEAN counterparts – many of which have already begun negotiations with the EU. Singapore, for example, has already reached and signed a formalised agreement. The bilateral trade value between the EU and Indonesia (EUR 25 billion, 2012) already falls far below the value of EU trade with neighbouring countries such as Singapore (EUR 52 billion), Malaysia (EUR 35 billion) and Thailand (EUR 32 billion). Furthermore, Indonesia currently only receives 1.6% of total EU investment into Asia and only 6% of investment into ASEAN.
With all that said, Indonesia-EU CEPA negotiations could yet develop into a complex process, given the likelihood that issues related to tariffs, government spending, competition policy, intellectual property rights and labour will arise during discussions. As explained by Mr Iman Pambagyo, Director General of International Trade Cooperation at the Ministry of Industry, Indonesia must take these issues into account and carry out the necessary preparations to make sure that the benefits of the agreement are shared.
“We need to undertake capacity building to prepare local businesses for global competition in meeting domestic demand and to make the most of the opportunities made available to us by increased access to European markets,” said Mr Pambagyo.
In real terms, the CEPA is expected to boost Indonesian exports by USD 9 billion and create a rise in GDP of USD 6.3 billion. It is also expected that a finalised agreement will facilitate the transfer of technology into Indonesia through increased investment from the EU.
APINDO - 17th December 2013
Capital: Jakarta
Population: 259 million (2016)
Currency: Indonesian Rupiah
Nominal GDP: $936 billion USD (IMF, 2016)
GDP Per Capita: $3,620 USD at Current Prices (IMF, 2016)
GDP Growth: 5.0% (2016)
External Debt: 36.80% of GDP (BI, Q2 2016)
Ease of Doing Business: 91/190 (WB, 2017)
Corruption Index: 90/176 (TI, 2016)
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