Domestic Economy

Tehran, Jakarta to Sign Trade Deal Next Week

Tehran, Jakarta to Sign Trade Deal Next Week
Tehran, Jakarta to Sign Trade Deal Next Week

Jakarta and Tehran have concluded the final stage of negotiations on a trade agreement, the Indonesian Trade Ministry said on Wednesday.
The announcement came after the two sides completed a seventh round of talks, and the ministry said the governments could now proceed to sign the documents on the deal called the Indonesia–Iran Preferential Trade Agreement (II-PTA), Borneo Bulletin reported.
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 non-traditional trade partner for Indonesia. With this PTA, we hope to widen our export opportunities and expand our market reach,” said the ministry’s director for bilateral talks, Johni Martha.
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.
Middle East countries 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 signed a comprehensive economic partnership agreement with the UAE. The government has been pursuing similar cooperation deals with other Persian Gulf states, including 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 Indonesian Trade Ministry noted that trade between Indonesia and Iran amounted to $54.1 million during the first three months of this year.
Last year, bilateral trade value increased by more than 23% to $257.2 million.
Motorcycles, vehicle parts, fatty acid industrial monocarboxylates and wood fiber are among the main goods shipped from Indonesia to Iran.
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.

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