Norwegian Crown Princess Mette-Marit (right) officially opens the Norway-Indonesia Business Forum at the Shangrila Hotel in Jakarta on Tuesday. The opening of the forum was witnessed by Norwegian Crown Prince Haakon Magnus (third left), Trade Minister Gita Wirjawan (second left) and Norwegian Trade Minister Trond Giske.
Indonesia and Norway need to work together to develop a more predictable regulatory environment to encourage more companies from the Scandinavian country to do business in Indonesian, the Norwegian Minister of Trade and Industry Trond Giske said to the press Tuesday.
“If you go half way across the globe … then you want to know that next year and the year after the framework of your business is quite stable,” said Trond Giske, Norway’s minister of trade and industry.
Trond Griske is part of the Norwegian delegation headed by the Norwegian Crown Prince, which visit Indonesia this week.
Lack of knowledge the biggest challenge
Giske said on Tuesday that officials of both countries were in the fifth round of negotiating a comprehensive economic partnership agreement. While formal trade barriers such as tariffs were not problematic, Indonesia needed to be a stable place to do business in order to draw Norwegian companies to the region, he said.
“So the most important gain is the predictability, and the treaty itself creates interest and curiosity. The biggest challenge between Indonesia and Norway is that we know too little about each other,” the minister said.
Negotiations slowed by Indonesians ministries
Indonesia’s annual exports to Norway are valued at about $175 million, while Norwegian shipments to Indonesia are half that amount.
The minister said that he expected trade between the two nations would increase once the agreement was in place. He cited as an example a similar bilateral economic agreement between Norway and South Korea in 2005 in which trade doubled.
Giske said that negotiations on the agreement were progressing with few obstacles, but talks were being slowed by the time taken for Indonesia to coordinate its government ministries. In the meantime, Norway was working to make Indonesia more visible to its businesses by opening an innovation office in Jakarta this week.
Two nations of growth
Despite the geographical distance Giske believes the two countries made natural trading partners.
“Norway is the on the top of the list of GDP [gross domestic product] per capita in the world. Indonesia is growing to be one of the top economies of the world in absolute numbers, and I think this mix is a really win-win situation,” the minister said.
Norway’s per capita income is about $75,000, about 20 times that of Indonesia’s. Norway’s economy is growing at a 4.7 percent pace, among the fastest in Europe, where other nations are experiencing slow economic growth. Eclipsing Norway’s expansion, Indonesia’s economy grew 6.2 percent in the third quarter.
Salmon for growing middle class
Giske want Norwegian companies to cater to Indonesia’s growing middle class, and cited salmon as a prime example of the appeal of a high-quality Norwegian product.
Norway has the world’s largest salmon industry, producing 1 million metric tons of salmon a year, of which 95 percent is exported. Indonesia imported 1,400 tons of Norwegian salmon in 2011, with that number growing by 70 percent so far this year, according to Christian Chramer, the regional director of the Norwegian Seafood Council.
Sugiyanto Wibawa, the chief operating officer of Supra Boga Lestari, which owns upmarket grocery retailers Ranch Market and Farmers Market, said that demand for salmon among its customers was growing and the fish made up half of Ranch Market’s seafood sales.
The $1 billion promise
Norway also boasts strong performance in the oil and gas and hydroelectric power sectors, and is known for strict regulation of its industries in order to promote sustainability and environmental protection.
The country has brought this ecological focus to its relationship with Indonesia, with Norway’s state-funded Reducing Emissions from Deforestation and Degradation (REDD) scheme setting aside $1 billion to finance rainforest conservation throughout the archipelago.
However, some nongovernmental organizations have criticized the spending. The Rainforest Foundation and Friends of the Earth Norway said that investment by the country’s pension fund — among the richest in the world — on sectors that damage rainforests is 27 times the amount that the nation sets aside for forest protection worldwide. Damaging rainforests can lead to an increase in greenhouse gases, data show.
Giske said that Norway has plans to reduce its net greenhouse gas emission to zero by 2050.
“We think that prosperous agricultural activities, prosperous legal use of logging, prosperous industries can be combined with stopping climate change and in fact have to be combined so people can see that you can grow more and have sounder business at the same time as stopping climate destructive activities,” he said.