Indonesia expects to conclude negotiations next year on a comprehensive economic partnership agreement (CEPA) with Denmark, Norway, Finland and Sweden grouped in the European Free Trade Association (EFTA), the Jakarta Post reports.
The agreement is expected to significantly boost trade and investment between Indonesia and the four Scandinavian countries.
Trade Minister Gita Wirjawan said on Tuesday that the agreement, expected to come into effect in 2014, would primarily boost bilateral trade between Indonesia and Norway by four times from the current level to around US$1.3 billion.
Bilateral trade reached a total of $309.53 million last year, with Indonesia exporting $67.55 million, while from January to August it stood at $238.67 million, out of which $63.8 million came from Indonesian goods exports, according to the Trade Ministry’s data.
“Our bilateral trade is still relatively small, only around $300 million with a deficit on our side. We hope in the future, it will be more balanced and we can also reap benefits [from the agreement] for the sake of capacity building,” he said after opening an Indonesia-Norway Business Forum hosted by Innovation Norway and the Indonesian Employers Association (Apindo).
Indonesia and Norway’s bilateral trade
Apart from increasing trade, Indonesia also aimed to attract sizeable investment from Norwegian companies, both from its Sovereign Wealth Fund and foreign direct investment (FDI) scheme, Gita added.
Norway’s Sovereign Wealth Fund, totaling $654 billion, is the largest in the world and owns 1 percent of global equity markets. Recently, it changed its rules to invest in countries according to the level of their gross domestic product (GDP).
Up till now, the fund had channeled around $650 million to Indonesia, Southeast Asia’s largest economy, Norwegian Ambassador to Indonesia Stig Traavik said last week. As moves to complete a global free trade deal under the Doha Round have been deadlocked for more than a decade, many countries are gearing up to seal a bilateral as well as regional trade agreement to free up flows of trade worldwide.
Indonesia launched the first round of negotiations with EFTA, which comprises Iceland, Liechtenstein, Norway and Switzerland, last year and has so far discussed a wide range of areas, including trade in industrial
and agricultural products, trade in services, investment, rules of origin and customs, technical barriers to trade and trade remedies.
Trade Minister Gita Wirjawan (second left) and Norwegian Trade Minister Trond Giske were accompanying the Norwegian Crown Prince and Princess at the Norway-Indonesia Business Forum at the Shangrila Hotel in Jakarta on Tuesday. (The Jakarta Post)