Jakarta, Indonesia – The Comprehensive Economic Partnership Agreement (CEPA) is expected to increase Indonesia’s exports to the UAE by around $4 billion, the country’s Chief Economic Affairs Minister Airlangga Hartarto said on Friday.
“It will also increase [our] imports from the UAE by approximately $4 billion,” he added.
According to Indonesia’s Foreign Affairs Ministry, export of palm oil, one of Indonesia’s top commodities, is covered by the deal. The Observatory of the Economic Complexity (OEC) data shows Indonesia exported $241 million of palm oil to the UAE in 2021. This makes palm oil as Indonesia’s second-largest goods export to the Emirates after jewelry ($345 million) that year.
“The [Indonesia-UAE CEPA] reflects the keenness of the two countries to strengthen relations for a sustainable future, and continue to increase bilateral trade,” the UAE Ambassador to Indonesia, Abdulla Salem Al Dhaheri, said.
Indonesia-UAE trade skyrocketed from $4 billion in 2021 to $5.1 billion the following year. Bilateral trade reached $3.6 billion in the first 9 months of 2023. Indonesia posted a trade deficit with the UAE, amounting to $463.3 million last year. However, Indonesia saw a $213.8 million surplus in Jan-September 2023, Trade Ministry data shows.
The government reported that the UAE was Indonesia’s second-largest trading partner in the Middle East in 2022.
The UAE has also shown growing interest in investing in Indonesia’s renewable energy. Abu Dhabi-based renewable energy giant, Masdar, participated in developing the freshly inaugurated 145-megawatt (Mwac) (192 megawatt-peak) Cirata floating solar plant in West Java. Cirata floating solar plant is the largest of its kind in Southeast Asia.
Earlier this year, Masdar announced it had made a strategic investment in Indonesia’s Pertamina Geothermal Energy, as the Emirati company seeks to enter the world’s second-largest geothermal market.
“It is true that our bilateral trade is on the rise. What is more important is investment, particularly in the energy sector, be it a direct investment like what we see in Cirata or how [Masdar] expands its portfolio by investing in Pertamina Geothermal Energy,” Pahala said.
Indonesia recorded $61.8 million in direct investment from the Emirates in Jan-September 2023. The UAE became Indonesia’s 25th largest foreign investor after Russia ($78.2 million) over the said period.