The UAE and Indonesia signed agreements worth billions of dollars during the visit of Indonesian President Joko Widodo to the UAE and the countries are looking to triple two-way trade in the next four years from $2.5bn in 2020 as relations strengthen.
The government and the private sector entities signed deals in different sectors including energy, aviation, financial services, artificial intelligence, agriculture and defence, the country’s trade minister Muhammad Lutfi told reporters on Friday. Deals valued at about $10bn were signed with Indonesia’s sovereign wealth fund.
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, while Etihad Credit Insurance, the UAE’s federal export credit agency, inked an agreement with state-owned reinsurance services provider Indonesia Re to improve funding access to small and medium enterprises and mid-cap companies to boost exports.
The South-East Asia’s largest economy will be looking to boost bilateral trade with the UAE as economic relations strengthen, Mr Lutfi said.
“We are going to sign CEPA (Comprehensive Economic Partnership Agreement) in the first quarter of next year and hopefully after that … we are going to double or triple (our trade) by 2025,” he told The National in a separate interview.
Mr Widodo visited the UAE from November 2 to November 4 and met with the country’s top leadership, including Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, and Sheikh Mohamed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces, to strengthen ties between the two countries.
Bilateral trade between the UAE and Indonesia reached about $2.5bn in 2020. The UAE exported goods worth about $1.5bn to Indonesia, while the South-Asian country's imports from the UAE amounted to $1bn.
“The trade deficit is related to energy imports from the UAE especially oil and its derivatives,” he said, while adding the country is looking to increase exports of stainless steel, gold jewellery and fresh agriculture produce to the Emirates.
Indonesia sold $8.6bn worth of jewellery last year and 37 per cent of it transited through Singapore to reach the UAE, he said.
“We want to expedite CEPA agreement to make sure that Indonesia will double and triple its export and import size with the UAE.”
Indonesia will also be conducting a joint study with the UAE to explore the possibility of setting up a joint venture with the Emirates Global Aluminium in the South Asian country.
“We would like to see the possibility of Indonesia state enterprise and EGA can co-operate together in order to get the aluminium production in Indonesia. This is one of the opportunities we are looking as well.”
EGA is jointly owned by Abu Dhabi’s strategic investment arm, Mubadala Investment Company, and the Investment Corporation of Dubai. It has more than 400 customers in over 50 countries.
Last year, Abu Dhabi National Oil Company signed a preliminary agreement with Indonesia’s Pertamina and Chandra Asri to explore the possibility of developing a crude-to-petrochemicals complex in Indonesia.
Abu Dhabi’s clean energy company Masdar also signed a power-purchase agreement with Indonesia’s state electricity company, Perusahaan Listrik Negara, to develop the country’s first floating solar photovoltaic plant.
The Abu Dhabi Investment Authority is also investing $400m to lead a pre-initial public offering fundraising round by Indonesia's biggest technology company GoTo.
This is the first principal investment by Adia’s private equities department in the technology business in South-East Asia and its largest investment in Indonesia, it said last month.
“Our digital economy will be an important part of our development,” Mr Lutfi said. “We are worth $40bn at this time and in 2030, we will grow to above $330bn, which is one of the biggest and robust digital economies in South-East Asia."
Indonesia’s economy is expected to grow 3.2 per cent in 2021 and 5.9 per cent in 2022 after contracting 2.1 per cent last year in the wake of the coronavirus pandemic, according to the International Monetary Fund.
In March, the UAE invested $10bn with Indonesia Investment Authority to spend on infrastructure and tourism projects in the country.
Indonesia will also be looking to enhance trade relations with Saudi Arabia, the Arab world's largest economy, Mr Lutfi said.