Indonesia and Iraq have agreed to eliminate trade barriers and provide incentives to increase bilateral trade volumes, which suffered a sharp decline last year.
During a meeting in Jakarta last week, the two countries’ senior trade officials agreed to establish a task force in the next three months to identify barriers in bilateral trade and investment.
Indonesian Trade Minister, Mari Elka Pangestu, said the task force would explore actions and possible incentives to promote the two countries’ trade volume.
Iraq had, for example, offered Indonesian businessmen wider investment opportunities in various sectors — energy and oil and gas, telecommunications, petrochemicals, pharmaceuticals, banking and housing construction projects — as part of a program to promote trade relations.
“Indonesia and Iraq have a lot of business potential that hasn’t been optimally explored,” Mari said at a press conference Saturday, after the sixth session of the Indonesia-Iraq joint commission meeting on economic, scientific and technical cooperation.
The meeting was also attended by acting Iraqi Trade Minister Safaaldeen Mohammed Abdulhakeem Al-Safi.
According to the Indonesian Trade Ministry, bilateral trade between Indonesia and Iraq
dropped significantly to US$41.26 million in 2009 from $265.59 million in 2008.
Mari said the total trade balance during the period of 2005 to 2009 did not reflected the actual potential. “We are quite optimistic that in the next three years, two-way trade can return to the levels recorded in 2008,” she said.
The ministry said Indonesia’s non-oil and gas exports to Iraq, which mainly consisted of milk, soap, cream, margarine, television sets and tires, reached $40.57 million in 2009. Before the US-led invasion in 2003, Indonesia’s exports of tea reached $70 million a year.
As part of the agreement, Mari said Indonesia invited Iraqi businesspeople to participate in the Trade Expo Indonesia in October 13 to 17 this year, while Indonesian investors were invited to join the Baghdad Fair in November.
“The two countries have also agreed to establish a Trading House in Baghdad and the Indonesian-Iraqi Business Council,” Mari said.
Abdulhakeem Al-Safi said his government had invited Indonesian entrepreneurs to take part in the “rebuilding Iraq” program that offered huge opportunities both in infrastructure and construction development projects.
He promised foreign investors, including those from Indonesia, easier procedures to getting business permits. “We also offer a tax holiday and other kinds of tax exemption for foreign investors,” he said.
Abdulhakeem acknowledged that security remained a problem in his country. “But it’s not as bad as what is being published by western media. Our lives are getting back to normal,” he added