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Hong Kong seeks to expand trade partnership with Indonesia

Customs Today | 13 March 2015

Support FTA: Hong Kong seeks to expand trade partnership with Indonesia

HONG KONG: Hong Kong, the world’s 10th largest trading economy, is seeking to expand its partnership both in trade and services with the Indonesian private sector to support a free-trade agreement (FTA) currently under negotiation.

As part of the plan, Hong Kong is set to carry out a mega-promotion project in Indonesia on Sept. 17, presenting more than a hundred firms in the areas of e-commerce, design, trade arbitration and finance.

The event, which will be Hong Kong’s first country-branding exercise in the world, is motivated by the potential purchasing power of the rapidly increasing middle class in Southeast Asia’s largest economy.

Hong Kong firms aim to assist in the promotion of Indonesia’s quality products through packaging, something which has been a key concern for local firms attending its fairs, according to Hoh Jee Eng, director of Malaysia’s office of the Hong Kong Trade Development Council (HKTDC).

“Indonesia has a lot of products that are very tasty, but not many people know about them […] We need to promote these outside Indonesia,” she said, adding that rising demand for halal food in China in line with an expanding Muslim population would be an opportunity that could be tapped together.

Hoh also pointed out intellectual property protection and web designs as other areas of cooperation between business people from both countries. “As Indonesian firms go out, there will be more trade disputes. We want to make them more aware about the importance of intellectual property protection to avert this,” she said.

The delegation of Hong Kong businesspeople will be led directly by the chief executive of the Chinese special administrative region, CY Leung, who is scheduled to make a courtesy call on President Joko Widodo, and be accompanied by several of his economic ministers.

Indonesia’s exports to Hong Kong dipped by 1.3 percent to US$2.5 billion last year, mainly comprising coal at 32.8 percent, jewelry (11 percent) and edible products and preparations, according to statistics from the HKTDC.

Imports, on the other hand, rose by 4.7 percent to $2.6 billion, primarily made up by telecommunication equipment and parts at 25.8 percent, computers (11.3 percent) and knitted or crocheted fabrics (6.2 percent).

Along with its partners in ASEAN, Indonesia is currently negotiating an FTA with Hong Kong with talks, which began last July, already entering their third round. The city government expects the agreement to be in place by 2016. “In Hong Kong, ASEAN is a fast growing market. We feel ASEAN should be closer to us,” Hoh said, pointing out the significant role that Indonesia played in the regional bloc.

Separately, the Trade Ministry’s director general for international trade cooperation, Bachrul Chairi, said that with the agreement, Indonesia expected more direct investment coming from Hong Kong to generate a wide range of projects and boost economic growth.

Investment will be a key target because Indonesia cannot expect any preferential treatment in terms of goods as Hong Kong applies zero duties on imports.

“We need more investment to finance our infrastructure and services to support our maritime sectors. The entry of foreign services will tighten competition and lower costs,” Bachrul told The Jakarta Post.

At present Indonesia levies duties of between 5 percent and 10 percent on goods from Hong Kong.

 source: Customs Today