Indonesia to sign trade agreement with Iran next week

Jakarta said the two countries would sign the trade agreement during a visit of Iranian President Ebrahim Raisi to Jakarta between May 22 and 24.

Vincent Fabian Thomas

Vincent Fabian Thomas

The Jakarta Post


Iranian President Ebrahim Raisi is welcomed upon his arrival at Damascus airport in Syria on May 3.(Reuters/Yamam al Shaar)

May 19, 2023

JAKARTA – Jakarta and Tehran have concluded the final stage of negotiations on a bilateral trade agreement, the Indonesian Trade Ministry said on Wednesday.

The announcement came after the two sides finished a seventh round of talks, and the ministry said the governments could now proceed to sign the documents on the deal, which is called the Indonesia–Iran Preferential Trade Agreement (II-PTA).

The ministry said Indonesia and Iran would sign the trade agreement during a visit of Iranian President Ebrahim Raisi to Jakarta between May 22 and 24.

“Iran is a nontraditional trade partner for Indonesia. With this PTA, we hope to widen our export opportunities and expand our market reach, especially in the Middle East and Persia,” Johni Martha, the ministry’s director of bilateral negotiations.

Read also: Indonesia signs CEPA, defense protocols, other deals with UAE

Indonesia has been looking to new markets to diversify its export options and thereby reduce its reliance on traditional trade partners, many of which have been affected by a weakened global economy and geopolitical risks.

The government aims to speed up the country’s economic recovery from the impacts of the COVID-19 pandemic by increasing its exports.

Countries of the Middle East are among those considered alternative trade partners for the government, along with countries in Africa, South Asia, South America and Eastern Europe.

In July last year, Indonesia inked a comprehensive economic partnership agreement (CEPA) with the United Arab Emirates. The government has been pursuing similar cooperation with other Gulf states, including a CEPA with Saudi Arabia since 2018.

The negotiations between Indonesia and Iran come at a time of heightened geopolitical tensions in many parts of the world.

The United States government has imposed sanctions on Iran since 1979, following the seizure of the US embassy in Tehran, which restricted access for US companies to conduct business in Iran.

The Trade Ministry noted that trade between Indonesia and Iran amounted to US$54.1 million during the first three months of this year.

Last year, the bilateral trade value increased by more than 23 percent to $257.2 million.

Read also: EU hopes for trade pact with Indonesia within two years

Motorcycles, vehicle parts, fatty acid industrial monocarboxylates and wood fiber are among the main goods shipped from Indonesia to Iran.

Meanwhile, major Iranian shipments to Indonesia include dates and grapes, carbonates and vegetable alkaloids, among many other products.

The ministry said Indonesia and Iran had also concluded negotiations on an article related to countertrade, which allows the two countries to pay for goods and services from the other side in kind rather than settling transactions with money.

This would allow trade between the two to continue despite possible difficulties in securing currency commonly used in international trade, such as US dollars.

“We have communicated intensively. Several postponed issues have been concluded. Both parties have been showing flexibility and commitment to quickly wrap up these negotiations,” Johni.

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