The Indonesian Trade Minister, Dr Mari Elka Pangestu, was recently in New Delhi to hold talks with her Indian counterpart, Anand Sharma, to boost bilateral trade and investment. In an interview, she talked on various issues including the proposal for an India-Indonesia Comprehensive Economic Partnership Agreement or CEPA. Excerpts from the interview:
What are the highlights of your meeting with Anand Sharma?
At the government-to-government level, we agreed to have a trade ministers’ meeting once in at least every two years. We will create working groups to address problems, identify opportunities and promote investment. At the business-to-business level, we looked at creating a Joint Business Forum that will meet alongside the government-to-government meetings to give inputs.
We have done a study on an India-Indonesia CEPA in goods, services and investment. The structure should be a top-up from the Asean-India FTA (free trade agreement). We will propose to our leaders whether it's good for us to pursue formal negotiations on a CEPA.
Our business sector is supportive of it and we wanted to see the Indian response.
Now that the goods chapter of the India-Asean FTA is over, what are the challenges regarding the services and investment part of the negotiations?
Asean (with 10 member-countries, including Indonesia) has already completed FTAs with five other countries on ‘Investment’ and ‘Services’. India is the sixth. We want the same approach we had in the other five. But India wants a different approach.
In investment, Asean adopts a negative list approach (where there will be restrictions only on a few sectors in the negative list, and the rest will be open), but India wants a positive list approach (where only a few sectors are open for investment, and the remaining restricted).
In services, Asean is used to a ‘10+1’ approach (10 offers from Asean and 1 offer from the dialogue partner), while India wants a ‘10+10’ approach (10 offers from India for the 10 Asean offers). We understand from the Indian side that it is willing to come closer to our approach because it is hard for us to have a different approach just for India. Negotiations are on to find a solution.
Despite India being a major exporter of ‘halal' (lawful/legal) bovine meat, Indonesia has banned Indian bovine meat and milk exports. Is that issue sorted out?
It is not a halal issue as that is something you can fulfil by working with our non-government halal certification agency, which certifies whether the slaughterhouse are compliant with the norms. It is about the disease (Foot and Mouth Disease) in India and whether we should consider zoning (giving clearance to exports from FMD-free zones in a country) or the whole country approach (where only if the entire country is FMD-free, exports are allowed).
For health reasons, our laws allow only import of meat from countries that are totally disease FMD-free and we don’t adopt the zoning approach. When India is wholly free from the disease (FMD), you can export to Indonesia.
Do you see an increase in palm oil exports from Indonesia to India?
The peak was in 2008 when we exported palm oil worth $4.1 billion to India. During January-July 2010, we have already exported $1.8 billion to India. So I think we should be close to $4 billion by this year-end. Due to India’s population growth and the increasing purchasing power of its middle class, we are hoping for not just increase in trade of crude palm oil, but further opportunities in investment in processing of palm oil and the trade in its downstream derivatives. This is an area for win-win cooperation.
What are the investment opportunities for Indian companies in the mining sector in Indonesia?
There is more interest from India to invest in coal mining in Indonesia than there is supply. But many of the large concessions are owned by Indonesian companies.
Some Indian companies have overcome this by taking a share in some of the Indonesian concessions. There will also be regulations stating that the mining companies have to consider supplying to the domestic market before exporting as we also have domestic needs.
We also want cooperation in processing of the coal and iron ore as well as the technology to gassify coal for energy needs.
How will you address the poor bilateral investment?
There is a lack of awareness. We talked a lot to Indian businessmen. They are interested in infrastructure and mining, but they haven't finished the required processes (in Indonesia).
Indonesian business groups find it difficult to enter the Indian market due to high tariffs and regulations. The government-to-government meetings will look into these problems.
Mutual recognition of standards and certification can help.
What are the highlights of your meeting with Anand Sharma?
At the government-to-government level, we agreed to have a trade ministers’ meeting once in at least every two years. We will create working groups to address problems, identify opportunities and promote investment. At the business-to-business level, we looked at creating a Joint Business Forum that will meet alongside the government-to-government meetings to give inputs.
We have done a study on an India-Indonesia CEPA in goods, services and investment. The structure should be a top-up from the Asean-India FTA (free trade agreement). We will propose to our leaders whether it's good for us to pursue formal negotiations on a CEPA.
Our business sector is supportive of it and we wanted to see the Indian response.
Now that the goods chapter of the India-Asean FTA is over, what are the challenges regarding the services and investment part of the negotiations?
Asean (with 10 member-countries, including Indonesia) has already completed FTAs with five other countries on ‘Investment’ and ‘Services’. India is the sixth. We want the same approach we had in the other five. But India wants a different approach.
In investment, Asean adopts a negative list approach (where there will be restrictions only on a few sectors in the negative list, and the rest will be open), but India wants a positive list approach (where only a few sectors are open for investment, and the remaining restricted).
In services, Asean is used to a ‘10+1’ approach (10 offers from Asean and 1 offer from the dialogue partner), while India wants a ‘10+10’ approach (10 offers from India for the 10 Asean offers). We understand from the Indian side that it is willing to come closer to our approach because it is hard for us to have a different approach just for India. Negotiations are on to find a solution.
Despite India being a major exporter of ‘halal' (lawful/legal) bovine meat, Indonesia has banned Indian bovine meat and milk exports. Is that issue sorted out?
It is not a halal issue as that is something you can fulfil by working with our non-government halal certification agency, which certifies whether the slaughterhouse are compliant with the norms. It is about the disease (Foot and Mouth Disease) in India and whether we should consider zoning (giving clearance to exports from FMD-free zones in a country) or the whole country approach (where only if the entire country is FMD-free, exports are allowed).
For health reasons, our laws allow only import of meat from countries that are totally disease FMD-free and we don’t adopt the zoning approach. When India is wholly free from the disease (FMD), you can export to Indonesia.
Do you see an increase in palm oil exports from Indonesia to India?
The peak was in 2008 when we exported palm oil worth $4.1 billion to India. During January-July 2010, we have already exported $1.8 billion to India. So I think we should be close to $4 billion by this year-end. Due to India’s population growth and the increasing purchasing power of its middle class, we are hoping for not just increase in trade of crude palm oil, but further opportunities in investment in processing of palm oil and the trade in its downstream derivatives. This is an area for win-win cooperation.
What are the investment opportunities for Indian companies in the mining sector in Indonesia?
There is more interest from India to invest in coal mining in Indonesia than there is supply. But many of the large concessions are owned by Indonesian companies.
Some Indian companies have overcome this by taking a share in some of the Indonesian concessions. There will also be regulations stating that the mining companies have to consider supplying to the domestic market before exporting as we also have domestic needs.
We also want cooperation in processing of the coal and iron ore as well as the technology to gassify coal for energy needs.
How will you address the poor bilateral investment?
There is a lack of awareness. We talked a lot to Indian businessmen. They are interested in infrastructure and mining, but they haven't finished the required processes (in Indonesia).
Indonesian business groups find it difficult to enter the Indian market due to high tariffs and regulations. The government-to-government meetings will look into these problems.
Mutual recognition of standards and certification can help.
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