RI, Saudi Arabia should boost trade, investment

Jakarta (ANTARA News) – Indonesia and Saudi Arabia should boost their bilateral trade further, as their two-year trade has been declining in the past few years, while the Saudi investment in Indonesia has also dropped significantly last year.

The visit this week by Saudi King Salman bin Abdulaziz al-Saud and his 1.5 thousand delegates, including 10 ministers and 25 princes, is described as a golden opportunity for the two countries to further step up their economic cooperation in trade and investment.

Between 2014 and 2015, the trade volume between Indonesia and Saudi Arabia had declined by 36 percent,” President Joko Widodo was quoted as saying by Deputy Foreign Minister Abddurrahman M Fachir, while receiving the Saudi Shura Council in Mid-Feb.

Based on the latest data, the trade volume of the two countries was recorded at US$5.48 billion in 2015, down to $3.39 billion in the Jan-Oct 2016 period.

Investment by Saudi Arabia in Indonesia has also been declining. In 2016, direct foreign investment from Saudi Arabia amounted to only about $900 thousand, down from $30 million in 2015, according to data from the Investment Coordinating Board (BKPM).

According to the Center of Reform on Economics (CORE), Saudi Arabias investment in Indonesia during the 2013-2016 period was still relatively less and more in the tertiary sector, especially the trade and repair sectors and the property sector, particularly hotels and restaurants.

The value of Saudi Arabia-based investment in Indonesia in 2016 amounted to only $900 thousand, or only 57th rank, while investment from Singapore, Japan, and China reached $9 billion, $5.5 billion, and $2.75 billion, respectively.

Therefore, the visit by the Saudi Arabia king should be used by Indonesia to discuss efforts to increase the trade and investment of both countries.

On Wednesday (March 1), Widodo and King Salman witnessed the signing of 11 cooperation agreements in the form of MoUs between Indonesia and Saudi Arabia at the State Palace in Bogor, West Java.

The MoUs covered cooperation in the fields of security, health, education, culture, investment, small medium enterprises, agriculture, fisheries, civil aviation operations, Islamic affairs, and the upgrading of the leaders of joint commission meetings.

The following day, the Indonesian Chamber of Commerce and Industry (KADIN) signed a MoU with its Saudi Arabian counterpart aimed at promoting cooperation on trade between the two countries.

The MoU was inked during the concluding part of the “Indonesia-Saudi Arabia Business Forum,” hosted by both chambers in Jakartas Grand Hyatt Hotel on Thursday, and will facilitate the preparations for the establishment of a “Bilateral Business Council.” Kadin Chairman Rosan P. Roeslani stated that both Indonesia and Saudi Arabia are among the group of countries with fast and dynamic emerging economies.

“Both nations have young, productive populations and economies, and in our respective regions, we are playing active geo-political and geo-economic roles,” he noted in his welcome address while opening the forum.

He further pointed out that Saudi Arabia is one of the most potential trading partners for Indonesia in the Middle East, with the total non-oil and gas trade value between both countries reaching $1.83 billion from 2011 to 2015.

On the occasion, Kadin signed four MoUs with Saudi companies on investment. “The MoUs signed today involve almost $2.4 billion. The MoUs cover four areas of cooperation. One of them involves our state construction firm Wijaya Karya,” Rosan Roeslani said during the forum.

Through the business forum, Saudi Arabia, which is the largest economy in the Middle East, will hopefully increase its investment in Indonesia, he stated.

The four areas of cooperation include housing construction, energy, health, and tourism.

In the housing construction sector, state-owned construction firm PT Wijaya Karya (WIKA) will be involved in the construction of 8 thousand units of houses in Saudi Arabia with a total value of $2 billion.

Regarding the trade sector, CORE, an independent research institute, highlighted the importance of expanding trade cooperation between Indonesia and Saudi Arabia to encourage the exports of national products to Saudi Arabias market.

CORE Executive Director Mohammad Faisal remarked in a press release in Jakarta on Saturday that Indonesias export share in Saudi Arabia is still minimal compared to that of other Asian countries such as China, South Korea, Thailand, and Vietnam.

“Of the total imports of Saudi Arabia in 2015, the market share of Indonesian exports amounted to only 1.5 percent. Meanwhile, Thailand was at 2.3 percent and Vietnam at 1.8 percent,” he added.

Therefore, legislator Tamsil Linrung of Commission VII on energy and mineral resources of the House of Representatives (DPR) expressed hope that the trade between Indonesia and Saudi Arabia will increase sharply after the visit by the king.

“Although the trade between the two countries has been declining over the past few years, we hope it would increase in the years to come,” Tamsil Linrung said in Jakarta on Saturday.

Linrung, who is a politician of the Prosperous Justice Party (PKS), said the trade volume of the two countries was recorded at $5.48 billion in 2015, down to $3.39 billion in the Jan-Oct 2016 period.

Saudi Arabia is a big market for various Indonesian halal products. Therefore, he hopes Indonesias halal product exports to Saudi Arabia would increase in the future.

“I welcome Saudi plan to invest in Indonesia as a follow up of the joint agreement reached in Jeddah in Sept 2015,” he stated.(*)

Source: Antara News