Jakarta, November 2023 - The industrial guild recently visited Indonesia to meet with authorities of the Association of Southeast Asian Nations (ASEAN) and to convene the first meeting of the Chile-Indonesia Business Council, together with representatives of the Indonesian Chamber of Commerce and Industry (KADIN). The Chilean delegation was headed by the former President of the Republic, Eduardo Frei Ruiz-Tagle, and included businessmen from our country.
In the context of the visit, the delegation held an audience with the Secretary General of ASEAN, Kao Kim Hourn, whose objective was to express Chile's interest in advancing a business rapprochement with ASEAN led by SOFOFA. In this context, the creation of SOFOFA's ASEAN Committee was announced, which will be led by Rodrigo Yáñez, former Undersecretary of International Economic Relations and partner at Deloitte, who said that "the 10 ASEAN countries represent a great opportunity for the development of new business and investment opportunities. We hope to move forward in the coming months in a rapprochement with the ASEAN business community with a view to establishing a cooperation mechanism that will allow greater trade and business integration of Chile with the bloc".
The Association of Southeast Asian Nations represents a significant importance for our country, due to the broad market opportunities it presents. With a population of over 670 million inhabitants, it offers a broad consumer base for various Chilean industries, such as mining, agriculture and manufacturing. Engagement with ASEAN is an essential part of the industry association's strategy to promote the diversification of Chile's trade relations, which is essential to reduce dependence on traditional markets and thus advance trade integration.
From a strategic point of view, this collaboration is fundamental to forge alliances for technology transfer, sustainable development and innovation, which will improve Chile's industrial capabilities and competitiveness at the international level. This is complemented by free trade agreements, which streamline bilateral trade by lowering tariffs and simplifying customs procedures.
First Meeting of the Business Council
During the trip to Indonesia, the First Meeting of the Chile-Indonesia Business Council was held. The president of the Chilean chapter of this Council and SOFOFA advisor, Juan Carlos Domínguez, highlighted this first meeting as an opportunity for the Chile-Indonesia Business Council.
symbol of a shared commitment to building a strong and dynamic business partnership. "Our meeting here in Jakarta is not just a gathering of two business communities; it represents the creation of a business network between the two countries, each rich in culture and potential. Chile and Indonesia, though separated by a great distance, are united in pursuit of growth, innovation and sustainable development. Our bilateral business relationship, though flourishing, has not yet reached its full potential and that is what we are exploring here today."
In this context, he expressed the importance of addressing and eliminating non-tariff barriers that hinder the full realization of trade potential, and highlighted the entry into force in 2019 of the Comprehensive Economic Partnership Agreement (CEPA) between the two countries. This agreement, he added, is a reflection of the mutual understanding and shared vision of a free market and fair trade environment, which offers opportunities for businesses in both Chile and Indonesia. However, the work of both organizations does not end with the signing of agreements, he said. "As leading business organizations, SOFOFA and KADIN have a crucial role to play. We must work and collaborate to identify these barriers and design effective strategies to overcome them, one of the objectives of our visit to Jakarta," said Dominguez.
Another relevant topic discussed during this meeting was related to the Additional Protocol to the Comprehensive Economic Partnership Agreement (CEPA) on trade in services, which was signed in November 2022. The opening of the services market in Indonesia will deepen our bilateral economic relationship in addition to encouraging a greater flow of trade in services in sectors such as legal, architectural, engineering, medical and dental services; information technology services; research and development; construction, among others. "Once in force, the agreement will establish the conditions for Chilean companies to provide services in the Indonesian market under the same conditions as local companies. This is an opportunity for our country to diversify its export basket to Indonesia and with them to ASEAN," said Diego Torres, SOFOFA's International Director.
In 2022, exports of Chilean services to Indonesia reached only US$ 500 thousand. Once the protocol on services is ratified and put into effect, a considerable increase in this figure is expected.
Meetings with sectoral ministries
As part of this first meeting of the Chile-Indonesia CEB, the business delegation met with representatives of the Ministries of Agriculture and Trade and Industry to advance the bilateral trade and sanitary agenda.
In particular, at the meeting with the Ministry of Trade and Industry, it was emphasized that the commercial relationship between the two countries can achieve important advances based on three elements:
First, the implementation of the CEPA, which is crucial to expand market access, reduce tariff barriers and foster a good business environment. Second, the sanitary opening of the two markets, which offers a significant opportunity for Chile, especially in the agri-food sector. Third, the progress of halal certification, a technical procedure through which it is verified and accredited that the content and manufacturing process of a product are in accordance with the provisions of Islamic regulations regarding what is lawful (Halal) and unlawful (Haram). Thus, during the next week, the "Chile Halal" entity will sign a mutual recognition agreement in Indonesia through which it will be able to grant halal certifications to Chilean products exported to Indonesia.
About the business relationship
The ten ASEAN countries have a combined GDP of more than US$3.65 billion. At present, Chile has a trade exchange with ASEAN that reaches US$5,205 million with an average annual growth rate of 7.2% during the last five years.
In 2022, trade with Indonesia exceeded US$675 million, growing at an average annual rate of 17% since 2017, two years before CEPA came into force.
Exports to Indonesia in 2022 totaled US$196 million, led by copper, cellulose, fresh grapes, timber, fish oils, salmon and fertilizers. Imports increased to US$479 million, driven by automobiles, urea, footwear, dump trucks and seaweed.
Source: SOFOFA
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