Southeast Asia on the rise as UAE shifts trade focus

Wam

• UAE-Asean trade $15.3bn in H1 2023
• Cepa agreements with Cambodia and Indonesia
• 48% of Asean-GCC trade was with UAE

Officials from the UAE are headed to Singapore as the country looks to improve ties and strengthen trade with Southeast Asia.

Top officials from the Dubai Financial Market (DFM) stock exchange will arrive in Singapore on Wednesday to hold their first international investor roadshow there. 

The debut aims to underline DFM’s commitment to broaden its global investor engagement as the UAE’s focus turns increasingly to the Association of Southeast Asian Nations (Asean).

Hamed Ali, CEO of DFM and Nasdaq Dubai said: “Our goal is to bridge East and Middle East, uniting capital, and opportunities to fuel the growing appetite of international investors.”

• UAE tightens Southeast Asia ties with Cambodia pact
• Southeast Asian investors flocking to Gulf to deploy capital
• UAE and Malaysia seek to grow $4.6bn trade with Cepa talks

The Asean bloc consists of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

The UAE and Asean countries shared $15.3 billion in trade in the first half of 2023, up 2 percent on the same period in 2022.

The bloc represented 5.2 percent of the UAE’s total non-oil foreign trade in 2022, reaching $32.2 billion.

Indonesian ties

Dr Thani bin Ahmed Al Zeyoudi, UAE minister of state for foreign trade, recently led a UAE delegation to attend the Asean Business and Investment Summit in Jakarta, Indonesia.

He said: “I believe that, as the economic centre of gravity continues to shift eastwards, the UAE and Asean can form a powerful new corridor of opportunity, one that can direct capital into high-growth sectors, develop new solutions in food security and energy transition, and create clusters of excellence in the industries of the future.”

The UAE-Indonesia comprehensive economic partnership agreement (Cepa) came into force on September 1, and aims for $10 billion in bilateral non-oil trade within five years.

Under the terms of the Cepa, more than 80 percent of UAE exports to Indonesia will be exempt from customs duties.

Suhail bin Mohammed al Mazrouei, minister of energy and infrastructure, also led a delegation to the UAE-Indonesia Business Forum in Jakarta last week. There, he said Emirati companies are interested in more investment partnerships in renewable energy in Indonesia.

Al Mazrouei hailed the work of the UAE’s state-owned clean energy company Masdar and PT PJBI, a subsidiary of Indonesia’s state-owned electricity company, in completing the Cirata Floating Photovoltaic Power Plant project in West Java.

It is the largest floating solar power plant in the world and the initial 145-megawatt (MW) phase is expected to come online later this year.

On Tuesday, Masdar and PLN Nusantara Power signed an agreement to develop the second phase of the Cirata plant for up to 500MW of power.

Masdar also entered the geothermal energy sector through an investment in Indonesia’s Pertamina Geothermal Energy earlier this year. 

Good growth prospects

Freddie Neve, senior Middle East associate at analyst Asia House, said GCC-Asean relations are expected to flourish as the UAE’s Cepas with Indonesia and Cambodia take effect and negotiations continue with Vietnam, Thailand, the Philippines and Malaysia.

According to Asia House, the UAE’s trade with Asean accounted for the highest proportion of GCC countries, at more than 48 percent of the total in 2021. 

UAE-Asean trade has also shown the greatest growth between 2010 and 2021, rising from $27.1 billion in 2010 to $41.2 billion in 2021.

Neve said: “We expect GCC-Asean ties to grow more important in the future with the expansion of Asean’s middle classes and good growth prospects for both regions over the next decade.” 

At the Jakarta summit, Al Zeyoudi held talks with Cham Nimul, minister of commerce for Cambodia, to discuss timelines for the implementation of the Cepa deal signed in June. It aims to push bilateral non-oil trade from $407 million to beyond $1 billion within five years.

Al Zeyoudi also met Tengku Zafrul Tengku Abdul Aziz, minister of investment, trade and industry for Malaysia, and Nguyen Hong Dien, minister of industry and trade for Vietnam, with the aim of accelerating Cepa talks. 

Nguyen Manh Tuan, the Vietnamese ambassador to the UAE, has said the two countries will conclude talks this year.

The UAE is Vietnam’s number-one Arab trade partner, accounting for 39 percent of its total trade with the region, and Dubai International Chamber opened a representative office in Ho Chi Minh City in July.

In Jakarta, Al Zeyoudi also held meetings with Alfredo Pascual, minister for trade and industry for the Philippines, and Francisco Kalbuadi Lay, deputy prime minister of Timor-Leste.