GCC and Indonesia begin negotiations for free trade agreement

• The agreement aims to boost Indonesia’s commercial presence in the Middle East.
• Indonesia has been working to strengthen trade ties with other GCC members since the pact came into force last September.
• The first round of talks is scheduled for September.

On Wednesday, the Gulf Cooperation Council and Indonesia signed a deal to commence long-awaited talks for a free trade agreement. The Indonesian government anticipates that the agreement will boost the country’s commercial presence in the Middle East. Indonesia already has a Comprehensive Economic Partnership Agreement with the UAE, a GCC member, marking its first such agreement with a Gulf nation.

Since the pact came into force last September, Indonesian officials have been working to strengthen trade ties with other GCC members: Saudi Arabia, Oman, Qatar, Bahrain, Kuwait, and the UAE. GCC Secretary-General Jassim Mohammed Al-Budaiwi and Indonesia’s Trade Minister Zulkifli Hasan signed the agreement to start the talks in Jakarta.

“This is historic. GCC comprises countries with strong economies and high purchasing power. We have relations that go way back, but our trade is small,” Hasan told reporters.

“Hopefully, we will conclude negotiations in two years. This is just the launch, so it’s going to be a marathon and we will start negotiating in September … It’s been years since we first started proposing an agreement, but it’s only today that we are launching the talks.”

He mentioned that the first round of talks is scheduled for September. Last year, Indonesia’s trade with GCC countries was valued at approximately $15.7 billion, with palm oil, coffee, jewelry, and motor vehicles being its main export commodities. A free trade agreement with the GCC is expected to help Indonesia strengthen its ties with the region, which have traditionally focused on domestic workers and Hajj and Umrah pilgrimages.

“There have been many trade barriers,” Hasan said. “We want to send doctors, but we have different standards. We want to send seafood, but our health standards are not the same, so it’s been very hard because we don’t have any agreement regarding trade.”

In Jakarta, Al-Budaiwi told reporters that the Gulf countries also seek greater cooperation with Indonesia.

“Trade with Indonesia is multifaceted and very developed. The most important thing from our meeting today is that we want to open up new sectors,” he said.

“We are certain that this launch will pave the way to increase the trade volume even further.”

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