Indonesia Wants Preferential Trade Agreements with Rwanda, East African Community
Jakarta. Indonesia is exploring the possibility of striking preferential trade agreements with Rwanda and the East African Community (EAC).
Indonesia expressed the intent to boost trade with the African countries when Foreign Affairs Minister Retno Marsudi hosted her Rwandan counterpart Vincent Biruta in Jakarta on Thursday. Retno told Biruta that Indonesia-Rwanda trade still had ample room for growth as trade numbers had been recovering steadily after the pandemic.
“We discussed the establishment of the PTA between Indonesia and Rwanda and explored the possibility of establishing a PTA between Indonesia and the EAC,” Retno told reporters shortly after her meeting with Biruta.
The EAC economic bloc encompasses Congo, Kenya, Somalia, Burundi, Rwanda, South Sudan, Uganda, and Tanzania.
A preferential trade agreement --also known as PTA-- would help Indonesia unlock non-traditional markets. However, tariff reductions in a PTA are not as dramatic as in a comprehensive economic partnership agreement. A PTA usually reduces or eliminates tariffs on selected goods.
Earlier that day, Retno and Biruta inked a memorandum of understanding (MoU) on general cooperation, with trade being included within the agreed scope of the partnership. Retno added: “This MoU encompasses, among others, trade, agriculture, industry, energy, and mining.”
African countries are far from being Indonesia’s top trading partner, as trade with the respective EAC countries failed to cross the hundred-million-dollar dollar mark. As a case in point, Indonesia-Rwanda trade only reached $1.4 million throughout 2023, although this was still an improvement versus the $700,000 recorded the previous year. Indonesia-Uganda trade hit $21.7 million in 2023, Trade Ministry data showed.
This was not the first time that Indonesia revealed its interest in a trade pact with Rwanda. In 2022, Jokowi proposed the possibility of striking such a pact to his Rwandan counterpart Paul Kagame on the sidelines of the G20 Summit in Bali.
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