Indonesia-Chile Comprehensive Economic Partnership Agreement
Chile and Indonesia are on track to sign a comprehensive economic partnership agreement (CEPA) before the end of 2017. Both nations concluded the fourth round of negotiations on 23 August 2017 in Jakarta, while the final round is scheduled for October in Chile. Iman Pambagyo, Chief of the Indonesian negotiating team, said that in the first stage of the partnership a number of specific goods are prioritized to be free from import tariffs.
However, the Indonesia-Chile comprehensive economic partnership agreement (IC-CEPA) is designed to be an incremental trade deal, meaning more items will be added later on, provided negotiations in October bear fruit.
As an example Pambagyo mentioned there exists plenty of demand in Chile for automotive products such as car batteries. Indonesia can deliver such goods. He added many entrepreneurs from Chile inquire about Indonesian products. However, high import tariffs, ranging between 6 - 8 percent, form an obstacle. Therefore, a free trade agreement would be a great solution to boost trade between both countries.
Meanwhile, there also exists plenty of demand from Indonesia for products from Chile, such as iron ore and grapes.
Pablo Urria, Chile's Director of Bilateral Trade Relations, believes the IC-CEPA would be a great step for both nations because when trade between both sides increases it can be followed by investment flows.
Shinta W Kamdani, Deputy Chairman for International Relations at the Chamber of Commerce and Industry (Kadin), said a FTA would be great as Chile can become the entrance point for Indonesian products on the American continent, a region where about one billion people live. In that context, it is important that Chile has many FTAs with other nations. Chile is already engaged in 26 free trade agreements.
If negotiations go according to plan, then the IC-CEPA would be the first free trade agreement (FTA) between Indonesia and a South American country. Regional peers such as Malaysia, Thailand and Vietnam already established CEPAs with Chile.
Indonesia-Chile Trade Relations:
| (in million USD) | 2015 |
2016 |
| Total Trade |
321.2 | 227.2 |
| Export | 147.3 | 143.8 |
| Import | 173.8 | 83.3 |
| Trade Balance | (26.5) | 60.5 |
Source: Bisnis Indonesia