Trade: Indonesia & the Indian Ocean Rim Association (IORA)
Considering ongoing uncertainty about the future of the Trans Pacific Partnership (TPP) after US President vowed to exit this trade deal, Indonesia is eager to find other strategies to boost Indonesia's export performance. The Indonesian government therefore plans to boost trade with the other 20 countries that are part of the Indian Ocean Rim Association (IORA). Total trade among these IORA nations reached USD $777 billion in 2015. Indonesia joined the IORA in 1997. However, the trade potential posed by this block has not been tapped optimally yet by Indonesia.
The IORA is an international organization, consisting of coastal states bordering the Indian Ocean, that aims to promote co-operation and closer interaction among its 21-member nations. Indonesian Trade Minister Enggartiasto Lukita said the nations that are member of the IORA are actually the future of the world economy. Therefore, it is of strategic importance to enhance trade relations with these member countries now. As mentioned above, total trade among the IORA nations reached USD $777 billion in 2015, up significantly from USD $233 billion in 1994. Moreover, approximately 70 percent of world trade goes through the Indian ocean, the world's third largest ocean. Particularly in terms of oil and gas distribution, the Indian Ocean is the world's key seaway.
Furthermore, together the IORA countries contain about 2.7 billion inhabitants, or 35 percent of the world population. With several nations among the IORA showing robust economic growth, implying the middle class segment grows, the strength of the consumer force within this area rises accordingly. However, the nations, combined, only account for about 10 percent of worldwide gross domestic product (GDP). Moreover, 96 percent of trade within the IORA is dominated by a selected group of member nations, namely Singapore, Malaysia, India, Indonesia, Australia and South Africa. Therefore, Indonesia wants to focus on enhancing trade relations with several other member nations, such as Bangladesh (which is increasingly importing crude palm oil from Indonesia), Kenya, Mozambique, Iran, UEA, as well as South Africa.
Indonesian authorities plan to use the upcoming IORA summit in the Jakarta Convention Center between 5 - 7 March 2017 as an opportunity to boost ties with the targeted nations. Besides discussing cooperation at the government level, there will also be a business forum on the sidelines that is expected to be attended by at least 477 participants. Indonesia is IORA chair in the 2015-2017 period.
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