Saudi Arabia is taking part in the first round of the Free Trade Agreement (FTA) negotiations between the Gulf Cooperation Council (GCC) countries and Indonesia.
The talks are the product of the joint statement, signed in July 2024, to initiate the FTA negotiations in order to enhance cooperation and strengthen economic ties between the GCC countries and Indonesia, according to the Saudi Press Agency (SPA).
GCC-Indonesia Negotiations
The first round of the FTA negotiations between the GCC countries and Indonesia will take place in the Indonesian capital, Jakarta, from September 9-30, 2024. The negotiations address a wide range of trade topics.
These include commodity trade, services, investment, custom procedures, rules of origin, technical obstacles to trade, and sanitary and phytosanitary measures. It also tackles trade facilitation, digital trade and trade remedies.
Negotiation Objectives
The goal of this round is to agree on the principles and main themes for negotiations related to the above-mentioned topics. Moreover, it aims to define the framework for the upcoming negotiation rounds and their desired goals, in an attempt to finalize the agreement within 24 months.
Additionally, this round aims to exchange information and data, and discuss trade challenges and opportunities for the participating members. It also aims to build confidence and partnerships through identifying fields of cooperation and coordination. This paves the way for reaching a final and comprehensive agreement.
GCC-Indonesia Trade Ties
In July 2024, the GCC countries and Indonesia signed a joint statement on the Launching of the Negotiation of the Free Trade Agreement, aiming to enhance cooperation and economic ties between both sides.
On this occasion, the Indonesian Trade Minister, Zulkifli Hasan, said that the trade relations between Indonesia and the GCC countries “has significant potential value,” according to the Indonesian Embassy in Riyadh. He added that this cooperation between both sides “will enhance Indonesia’s export market to all GCC member countries and further strengthen Indonesia’s relations with all Gulf countries.”
The FTA agreement will grant Gulf commodities and services a preferential advantage in the Indonesian markets, by removing or cutting tariffs on most goods and easing customs procedures. Furthermore, it will streamline national regulations related to service access and establish frameworks for legislations and procedures that govern investments.
Saudi-Indonesia Trade Relations
In recent years, trade between Saudi Arabia and Indonesia has thrived. In 2023, bilateral trade reached around $7bn, with exports amounting to $2.078bn and imports $4.067bn. Moreover, non-oil trade saw a surplus of $1.335bn.
From 2019 to 2023, non-oil trade exports totaled $2.3bn, while the compound growth of trade volume reached 4.5%.
In the period between January and May 2024, total trade accounted for $2.695bn, with exports reaching $914.5mn, and imports $1.781bn. Saudi exports to Indonesia included minerals and organic chemical products, while imports from Indonesia involved vehicles and animal and vegetable fats and oils.
The General Authority for Foreign Trade heads the Saudi delegation in the first round of negotiations, with the participation of several Saudi ministries. These include the Ministry of Commerce; the Ministry of Energy; the Ministry of Investment; the Ministry of Environment, Water and Agriculture; the Ministry of Industry and Mineral Resources; and the Ministry of Economy and Planning.
It also involves other government entities, such as Saudi Food and Drug Authority; Zakat, Tax and Customs Authority; Saudi Standards, Metrology and Quality Organization; Saudi Exports Development Authority; and Saudi Central Bank.
