Saudi Arabia and Indonesia have signed deals and preliminary agreements worth $27 billion (Dh99.1 billion) as Asia’s fifth-largest economy looks to the deepen trade and investment ties with the kingdom.
The agreements signed by private sector companies during the state visit of Indonesian President Prabowo Subianto span sectors including clean energy, petrochemicals and aviation fuel services and aim to advance economic partnership between the two nations, said a joint Saudi-Indonesian statement on Wednesday issued by the Saudi Press Agency.
The two sides also agreed to enhance investment co-operation and build partnerships in priority sectors including energy, financial services, mining and industry, logistic services, tourism, agriculture and green technologies.
The investment co-operation is in line with Saudi Arabia’s Vision 2030 economic transformation agenda and Golden Indonesia 2045, the programme that outlines Indonesia’s national development priorities, SPA said.
Role of investment
Joint investments are vital in “supporting economic integration and creating exceptional opportunities for the private sectors in both countries”, according to the statement.
Both sides also agreed to develop an “enabling investment environment and adopt effective mechanisms that align development and investment policies”, it added.
Trade ties
Indonesia, one of the fastest growing emerging markets in Asia, is keen to expand its trade and investment ties with partners in the six-member GCC economic bloc.
The Asian nation has signed a Comprehensive Economic Partnership Agreement with the UAE, the second-largest Arab economy. The pact with the UAE went into force in August 2023 and has substantially boosted bilateral trade and investments.
The trade agreement allowed the removal or reduction of tariffs on a range of goods and eliminated unnecessary trade barriers, the UAE Ministry of Economy said at the time.
The UAE-Indonesia Cepa, signed in Abu Dhabi in July 2022, is projected to boost the value of bilateral non-oil trade from its $4.08 billion to more than $10 billion in five years of implementation.
The Cepa also seeks to raise the combined value of trade in services between the two nations to $630 million by 2030 as more than 80 per cent of UAE exports to Indonesia under the agreement are exempt from customs duties.
In April, Mr Subianto met President Sheikh Mohamed at Qasr Al Shati in Abu Dhabi and discussed opportunities to enhance bilateral co-operation, particularly related to the economy, investment, renewable energy, sustainability and infrastructure, state news agency Wam reported.
The two sides also signed trade and investment agreements to further build on Cepa deals.
Saudi Arabia and Indonesia have historic economic ties and bilateral trade has risen to more than $31 billion during the past five years. Saudi Arabia is a leading GCC trade partner of Indonesia, SPA said.
During the state visit, Saudi Arabia and Indonesian officials also welcomed the positive outcomes of negotiations towards an Indonesia-GCC free trade agreement. The two sides held discussions in September last year and February this year, raising hopes of an agreement “in the near future”.
Areas of co-operation
In terms of energy security and supplies, Saudi Arabia and Indonesia agreed to boost co-operation on the supply of crude oil and its derivatives, petrochemicals. They also agreed to work together to explore investment opportunities in refining and petrochemicals, as well as innovative uses of hydrocarbons and the development of environmentally friendly downstream applications and technologies.
They also agreed to increase co-operation between energy companies to explore resources in both countries to increase the flexibility and efficiency of supplies.
Officials pledged to boost investment co-operation in “electricity, renewable energy, energy storage and developing its projects”, SPA said.
Mining is the other sector, where Riyadh is keen to build partnerships with Jakarta and co-operation and investment opportunities.
Mining is the one of the central planks of the kingdom's Vision 2030 programme, the over arching blueprint of the kingdom's efforts to diversify its economy away from hydrocarbon revenue.
In January this year, Saudi Vice Minister of Mining Affairs Khalid Al Mudaifer said the kingdom is pushing ahead with the development of a new mineral project with an estimated investment value of $100 billion, with about $20 billion of that already being invested during initial stages.
Last year, Saudi Arabia raised the value of its still unexplored potential mineral resources to $2.5 trillion, from the previous $1.3 trillion after the it discovered rare earth elements and metals.
Saudi Arabia's Energy Minister Prince Abdulaziz bin Salman Al Saud in January said they investment in critical minerals mining and processing must take place “as fast and furious as possible”.
The kingdom has opened up several sectors of its economy including mining for foreign direct investment.
Other areas of co-operation discussed during the Indonesian president's state visit include the digital economy and innovation, judiciary and justice, labour and human resources, culture, tourism, sports, education and scientific research, industry and mining, agriculture, fisheries, and food security. Boosting boosting aviation connectivity between the two countries was also covered in the meetings.
