The UAE and Indonesia have signed a Comprehensive Economic Partnership Agreement (CEPA) that will turbocharge bilateral trade to $10 billion in the next five years. It’s the third such deal we have signed following those with India and Israel, but the first promising to unlock the untapped potential of the halal economy.
Indonesia is the world's fourth-most populous country and the largest economy in South-East Asia. Together with the CEPA we already signed with India – where a large share of the population is Muslim – and the trade agreement that we expect to sign soon with Turkey, we will have markets of more than 1.7 billion consumers open to us. These countries enjoy strong population growth and an expanding middle class. Each is unique in terms of preferences and potential, but nothing exemplifies the social and economic opportunities more than the halal economy.
The halal economy is on track to become one of the world’s fastest-growing sectors and could be worth $3.2 trillion by 2024. It will be driven by a growing Muslim population set to hit 2.6 billion people and represent nearly 30 per cent of the world’s population by mid-century. As this high-potential network of consumers expands, competition to provide the goods and services they seek will intensify.
Our agreement with Indonesia gives us a cutting edge. Under the deal, both parties will promote current and future sectors of the halal economy. We will do so by facilitating investment and financing trade in goods and services that contribute to the development of this high-potential market.
The UAE was the Muslim world’s largest recipient of foreign direct investment last year. Few Muslim-majority nations generated more positive capital inflows than we did in 2021. The world sees us as a stable, reliable and attractive place to do business.
Our infrastructure and connectivity to global markets by road, sea and air provide a gateway for Indonesian goods to reach millions of new people. Exporters here will benefit from improved productivity and efficiency gains as we unclog supply chains and create new networks for products – from Sharia-compliant financial services to the latest in modest fashion – to flow into Asian markets.
This opportunity was one of the many reasons that brought us together in Jakarta last year to launch talks on this deal. Like much of our nation’s trailblazing trade policy to date, what we achieved was significant. Last week, President Sheikh Mohamed and President Joko Widodo witnessed the signing of the agreement in Abu Dhabi.
The agreement with Indonesia builds on a strong foundation of economic co-operation. Non-oil trade grew by 44 per cent in the first quarter of 2022, and we are likely to surpass pre-pandemic figures this year. At the end of 2019, Indonesia had invested more than $10 million into our economy. Our FDI in Indonesia surpassed $176m by 2020. The far-reaching deal will accelerate more than $10bn of Emirati investment projects in priority sectors such as agriculture, energy, infrastructure and logistics. It will also encourage future co-operation in tourism, entrepreneurship, health care and clean and renewable technology.
As we build a digital economy by developing smart cities, embracing the blockchain, rolling out 5G services and placing greater emphasis on the Fourth Industrial Revolution, we can work with Indonesia to deliver rapid technological progress. Its warehousing and logistics industries in particular stand to benefit from the digitalisation services our companies can offer. Gains in automation, artificial intelligence, cloud computing and 3D printing could also be realised. Innovations in these areas and others will be safeguarded through a robust framework to protect intellectual property rights. These measures go further than the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights in many ways, and it should accelerate knowledge transfer and technology exchange.
Moreover, we are also optimistic about the potential benefits from a joint project to build one of the world’s largest floating solar plants, knowledge-sharing between our aluminium producers, as well as a spate of initiatives across energy, infrastructure, financial services, tourism, education and agriculture.
As Muslim-majority countries with young, multi-ethnic, multi-faith populations and strong trading histories built on our respective positions as regional crossroads, this CEPA reflects our shared interests, values and ambitions. It also underlines our friendship that has grown deeper over more than four decades of diplomatic relations. In recognition of this, we even renamed roads after one another. In 2020, Al Maarid Street in Abu Dhabi became President Joko Widodo Street and Jakarta-Cikampek 2 Elevated Toll Road was renamed Sheikh Mohamed Bin Zayed Al Nahyan Elevated Toll Roada year later.
Now that the agreement has been signed, we will press on with implementation at the earliest possible opportunity. To ensure our manufacturers, merchants, builders and business owners are primed and ready to do so, we will continue to mobilise the private sector.
But we are not stopping there. We are going farther and faster to strengthen our position as a global gateway for goods and services. Strategically situated between East and West, we can continue to be the bridge that connects Africa, Asia and Europe and drives the halal economy forward, deploying next-generation technology to realise efficiencies and drive value creation.
Unlocking the south-south trade corridor and building a new and highly digitised new trade route will make it easier than ever for importers and exporters to do business with the biggest economy in South-East Asia, as we navigate our next chapter of global growth.