Economy UAE-Indonesia deal to add billions to bilateral trade By Andy Sambidge July 4, 2022 Reuters/Alexander Zemlianichenko Indonesian president Joko Widodo said the agreement reflects an "ambitious leap in cooperation" between the two countries Officials from Indonesia and the UAE have hailed the signing of a free trade agreement which is predicted to boost bilateral trade to more than $10 billion annually within five years. The Comprehensive Economic Partnership Agreement (CEPA), signed in Abu Dhabi on Friday, will eliminate or sharply reduce duties on 99 percent of goods traded between the nations. UAE President Sheikh Mohamed bin Zayed Al Nahyan said: “Indonesia is one of our closest strategic allies and our nations have worked together in the spirit of cooperation and unity for decades to promote social and economic development and unlock opportunities for our people. UAE reaches trade pact with Indonesia “Not only is it my hope that this agreement creates a new platform for cooperation, investment and knowledge transfer, but also offers us new tools to navigate future challenges and opportunities together.” Indonesian President Joko Widodo added that the agreement reflects an “ambitious leap in cooperation” between the two countries. Dr Thani bin Ahmed Al Zeyoudi, the UAE’s minister of state for foreign trade, said in comments published by state news agency WAM that the CEPA is expected to contribute around $4.6 billion to the GDP, as well as create around 50,000 high-skilled jobs. He added that the deal includes cooperation in various sectors including halal food, Islamic fashion, pharmaceuticals and other Sharia-compliant sectors. Abdullah bin Touq Al Marri, minister of economy, said he believed the agreement will enable the two countries to raise bilateral trade up from $3 billion annually in 2021 to in excess of $10 billion annually within five years. “The partnership is conducive to drawing foreign investments from other countries interested in having access to the two nations’ markets,” he said. “We succeeded in reaching a balanced agreement that ensures a win-win partnership while protecting each other’s domestic industries.” According to Al Marri, up to 83 percent of the UAE exports will benefit from the immediate elimination of customs tariffs between the two nations. Zulkifli Hasan, minister of trade of Indonesia, said UAE-Indonesia trade relations are growing stronger, especially with the signing of the CEPA. Oil rich UAE has forged closer trade ties with Indonesia as part of an ambition to double its own economy to $816 billion by the end of the decade, in part by signing free trade agreements. Indonesia’s main exports to the UAE are palm oil, jewelery and precious metals, while UAE exports to Indonesia are mostly petroleum gases and non-crude oils, iron and non-alloy steel, according to the Observatory of Economic Complexity. The CEPA with Indonesia is the third of its kind to be signed by the UAE since the year started following the agreements signed with India and Israel in February and May respectively. Mohamed Hadi Al Hussaini, minister of state for financial affairs, said that the CEPA underscores the significant commercial and investment opportunities for cooperation. Dr Sultan bin Ahmed Al Jaber, minister of industry and advanced technology, added: “The agreement will have a direct impact on creating more opportunities between the business communities in both countries, which will further boost growth, stability and prosperity, and create promising prospects for the two countries, as well as region and the world.” Mariam bint Mohammed Almheiri, minister of climate change and the environment, said the signing of the CEPA is part of the UAE’s efforts to create a more sustainable world and shape a better future for humanity at large, especially as the agreement will benefit agriculture, ensure food security and preserve natural resources. Omar bin Sultan Al Olama, minister of state for artificial intelligence, digital economy and teleworking applications, added that the deal is a joint platform for “foreseeing and establishing future opportunities in advanced technologies”. As two of the Islamic world’s most dynamic economies, the CEPA will lead to increased development and new opportunities for the growing Islamic economy, estimated to be worth $3.2 trillion by 2024. The UAE and Indonesia launched CEPA negotiations in September 2021 and both countries have continued to explore closer collaboration by working together on a wide range of strategic projects, including the world’s biggest floating solar power plant. The UAE also pledged $10 billion to the new Indonesia Investment Authority, while the Indonesian government became the largest sukuk issuer on Nasdaq Dubai in May 2019. Indonesia is south east Asia’s largest economy with a population of more than 270 million people, making it the world’s fourth-most-populous nation. Husin Bagis, the Indonesian ambassador to the UAE, told WAM that SMEs in the agriculture sector and many industries that use petrochemicals will be the immediate beneficiaries of the CEPA. “Increased business and new opportunities for SMEs will translate into economic prosperity for their employees and open up new job prospects as well,” he said. The CEPA is expected to boost imports of petrochemicals from the UAE to Indonesia, which will benefit a large number of Indonesian SMEs that use plastic in their business for many purposes, the envoy added. Of the total imports from the UAE to Indonesia, 70 percent constitute oil and gas and of the remaining 30 percent a huge chunk is petrochemicals, a main ingredient of plastic products. The CEPA was signed during Widodo’s fifth visit to the UAE since he became president.