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RI should 'play smart' as it zeroes in on ratifying trade deals with Iran
House of Representatives (DPR) Commission VI, which oversees trade and investment, on Monday gave the green light for the government to ratify the trade deal soon so it can take effect in January next year.
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President Joko “Jokowi” Widodo (right) receives late Iranian President Ebrahim Raisi at the Bogor Presidential Palace in West Java on May 23, 2023. During their meeting, the two leaders signed cooperation agreements in various fields, including trade. (Twitter.com/@jokowi)
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ndonesia has set its sights on ratifying a preferential trade agreement (PTA) with Iran, with many expecting it to open doors for local products to markets in Central Asia, South Asia and the Middle East, but experts have urged caution over its geopolitical situation and sanctions from Western countries.
House of Representatives (DPR) Commission VI, which oversees trade and investment, on Monday gave the green light for the government to ratify the trade deal with Iran soon so it could take effect in January next year.
The agreement would become the second trade deal between Indonesia and a Middle Eastern country, following the Comprehensive Economic Partnership Agreement (CEPA) between Indonesia and the United Arab Emirates in July last year. Jakarta has also started negotiations with Saudi Arabia on a similar agreement.
Iran is not a major trade partner for Indonesia, ranking only 62nd in export value last year with exports to Tehran. Exports only amounted to US$198.1 million, less than 1 percent compared with shipments to China, the archipelago’s main trading partner, with goods valued at $64.9 billion in the same period.
Iran also does not ship many exports to Indonesia.
However, Trade Minister Zulkifli Hasan explained that Iran was a strategic location and could serve as a trading hub between Indonesia and other countries in the region.
“At the same time, a relatively high tariff structure in Iran has become the main obstacle for Indonesian products to be competitive in that country. Thus, we hope the PTA could increase our exports to Iran and its surrounding countries,” Zulkifli explained to the lawmakers on Monday.
