Etihad Credit Insurance, the UAE's federal export credit company, has signed a reciprocal reinsurance agreement with its Indonesian counterpart PT Reasuransi Indonesia Utama (Indonesia Re) to bolster bilateral trade and expand their collaborative initiatives.
As part of the agreement, the two state-owned entities will help domestic companies in both countries to expand internationally and focus on sustainable and inclusive economic development, ECI said in a statement on Monday.
They will protect businesses that want to venture into new markets from “political, commercial and non-commercial risks” and make it easier for these companies to access liquidity and funds to pursue their international expansion, the statement said.
“The reinsurance agreement between ECI and Indonesia Re is a natural progression of decades-long business relation between the two countries and the implementation of the recently signed MoU [memorandum of understanding],” Massimo Falcioni, chief executive of ECI, said.
The entities signed a preliminary agreement in the UAE in November.
“The reinsurance agreement focuses, among others, on trade and project financing for micro, small and medium-sized enterprises, including but not limited to the health sector, sustainable energy and digital transformation.”
The net worth of non-oil trade between the UAE and Indonesia in the past five years has exceeded $11 billion, of which the UAE’s exports to Indonesia accounted for $1.4bn, according to official data.
Bilateral trade reached about $2.5bn in 2020, with the UAE exporting goods worth about $1.5bn.
The two countries are also set to sign a comprehensive economic partnership agreement this year.
Trade is estimated to grow by $1.6bn annually led by sectors such as jewellery, vegetable oil, cars and car parts, copper, rubber and aluminium.
The UAE and Indonesia are also collaborating in oil exploration, halal food, green technology, utilities, agriculture and education.
The Emirates last year unveiled plans to invest $10bn in the Indonesia Investment Authority.
Abu Dhabi clean energy company Masdar is constructing Indonesia's first floating solar photovoltaic plant and Dubai's DP World signed a $7.5bn deal with Indonesia's sovereign wealth fund to develop the South-East Asian country's seaports over a period of up to 30 years.
“We’re confident that this [agreement] will become a catalyst in empowering Indonesia’s commercial ties with the UAE and make a marked difference for our respective businesses by furnishing companies in both countries with ideal and innovative export credit insurance solutions,” said Benny Waworuntu, chief executive of Indonesia Re.
As part of their agreement, ECI and Indonesia Re will also support enterprises in “several growth sectors” with trade finance products such as Etihad Credit Insurance’s Sharia-compliant finance solutions, the statement said.
“This agreement is a perfect warm-up for the UAE’s presence at the imminent G20 summit, which reflects the importance of collective action and inclusive collaboration among major developed countries and emerging economies around the world,” Mr Falcioni said.
Indonesia holds the presidency of the intergovernmental forum G20 (Group of Twenty) and the UAE is one of the chief guests for the 17th G20 Heads of State and Government Summit which will take place in November 2022 in Bali.