Archives May 2021

INDONESIA-EFTA CEPA 2021: IMPLEMENTATION IN TRADE & INVESTEMENT
EFTA Secretary-General meets Indonesian Deputy Minister of Trade in Geneva to discuss on EFTA–Indonesia Comprehensive Economic Partnership Agreement on April 30, 2021(CEPA)

Writer: Hendra Manurung is currently a doctoral candidate in International Relations at Padjadjaran University, Bandung, West Java

Switzerland, Liechtenstein, Norway and Iceland as EFTA countries are ideal partner due to their high purchasing power markets as well as having the value of large foreign investment to most developing countries. It can be used as an entry point for Indonesia’s trade advantages in goods, services and investment in continental Europe, and the potential export destination with products complementary. The IE-CEPA Agreement benefits for Indonesia are enormous due to Indonesia’s market access expansion to EFTA countries and accelerating the competitiveness quality of Indonesian products. The cooperation between the five countries, involving Indonesia, Switzerland, Iceland, Norway, and Liechtenstein will not harm each other. In fact, there are many benefits that can be obtained, particularly with the zero-tariff policy which is applied to almost 99 percent of Indonesian products exports to EFTA countries.

Indonesia is currently offering EFTA countries commitments in 5 (five) potential investment sectors, namely: 1) agriculture, 2) mining, 3) manufacturing, 4) energy, 5) clean water supply. Indonesia and the European Free Trade Association Comprehensive Economic Partnership Agreement, known as IE-CEPA are targeted to be rolled out in semester II-2021. Indonesian Ministry of Trade and the Chamber of Commerce and Industry of Indonesia continue to finalize the implementation of investment and trade in the four countries that are members of the European Free Trade Association or EFTA.

The four countries are Switzerland, Norway, Iceland and Liechtenstein. In the trade sector, Indonesia will get a 0 percent tariff on the elimination of 7,042 tariff posts or 81.74 percent of the total tariff posts from Switzerland and Liechtenstein, 8,100 tariff posts (94.28 percent) from Iceland, and 6,388 tariff posts (99.94 percent ) from Norway. Through the IE-CEPA cooperation forum, it is likely that Indonesia’s industrial and business sectors can generate exports and gain foreign investment from Europe to support the acceleration of national economic growth. Previously, on March 22, 2021, the Indonesian government and the People’s Representative Council of the Republic of Indonesia officially passed the Draft Law on the Comprehensive Economic Partnership Agreement between the Republic of Indonesia and the EFTA States aka the Comprehensive Economic Partnership Agreement between the Republic of Indonesia and EFTA Countries). In the trade sector, Indonesia can take advantage of a 0 percent rate to boost exports of competitive products to the four EFTA countries.

The Swiss government imposes tariffs of 0 percent for a wide range of gold products and jewellery, textiles, footwear, two-wheeled vehicles, and essential oils. While the government of Iceland, has imposed a tariff of 0 percent for the products of Indonesian export commodities, such as coffee products, footwear, fish oil, fish, shrimp, paper, and furniture.

Moreover, in the investment sector, the Indonesian government has offered commitments in 5 (five) potential investment sectors consisting of 182 sub-sectors. The five strategic sectors include agriculture, mining, manufacturing, energy, and the provision of clean water. Until now, Indonesia has ratified IE-CEPA through Law Number 1 of 2021 concerning the Ratification of IE-CEPA. Currently, Indonesia only has to complete 2 (two) derivative regulations, namely a) regulations of the minister of trade and b) regulations of the minister of finance.

Indonesia-European Free Trade Association Comprehensive Economic Partnership Agreement or Indonesia-EFTA CEPA or IE-CEPA is economic cooperation between Indonesia and the EFTA group of countries consisting of Iceland, Liechtenstein, Norway, and Switzerland. Indonesia’s agreement with an EFTA country is Indonesia’s first comprehensive economic agreement with a country in Europe. In addition to increasing exports, investment and market access to the European continent, IE-CEPA is expected to raise the profile and positive campaign for Indonesian palm oil products globally and encourage the acceptance of sustainability standards for Indonesian palm oil (ISPO) by Switzerland.

In the future after the enactment of the National Bill on IE-CEPA, the government will make supporting regulations to implement IE-CEPA in the form of a Minister of Finance Regulation regarding the procedures for imposition and determination of import duty rates, as well as a Regulation of the Minister of Trade regarding the provisions of a certificate of origin. This comprehensive agreement consists of 12 chapters, 17 attachments, and 17 additional documents from the appendix covering issues of trade in goods and services, investment, protection of intellectual property rights, procurement of government goods and services, and cooperation and capacity building. The IE-CEPA Agreement is Indonesia’s first trade agreement with countries on the European continent. In addition, the Government of Indonesia should immediately prepare strategic steps through coordination efforts with relevant ministries and agencies, as well as stakeholders to implement IE-CEPA which is targeted at the beginning of the second quarter of 2021.

Henceforward, with the passage of the draft law into National Law, the Indonesian Parliament has carried out the constitutional mandate because IE-CEPA and the Omnibus Law is expected able to promote economic transformation and improve public welfare, particularly in promoting post-Covid-19 national economic recovery. IE-CEPA is the initiation of negotiations between Indonesia and EFTA countries starting in 2005 through the establishment of a joint feasibility study, which was followed by negotiations since 2011. Negotiations were suspended in 2014 and reactivated in 2016. The IE-CEPA was signed on 16 December 2018 in Indonesia by the Indonesian Minister of Trade and Ministers representing EFTA countries. This agreement also covers issues of trade in goods and services, investment, protection of intellectual property rights, procurement of government goods and services, and cooperation and national capacity building.

In 2018, the IE-CEPA negotiations have been going on intensively for 8 years since 2010, where the longest CEPA negotiations have ever had by Indonesia to date. Indonesian business actors should seriously optimize the CEPA with the EFTA countries that have been struggling for a long time because based on a survey some of the free trade agreements have stalled or are not being properly utilized. The IE-CEPA negotiations lasted for eight years before finally being declared substantively concluded by negotiators at a meeting in Bali on 29 October to 1 November 2018, and declared final by the Ministers on 23 November 2018 in Geneva, Switzerland. Previously, Indonesia had signed a CEPA with Chile in December 2017 in Santiago. In fact, in 2019 most international events also covers dangerous clashes between major powers in the Middle East and in South Asia. Missile strikes, proxy attacks and challenges to freedom of navigation in the Persian Gulf in mid-2019 raised the possibility of Iran going to war with Saudi Arabia and other regional powers, and potentially with the United States. While India and Pakistan as neighbouring countries also disputed over Kashmir and escalated to open conflict. In Asia-Pacific, these two countries are nuclear-armed states. Henceforth, in both cases, the situation eventually calmed, but not as a result of traditional crisis management. Therefore, in 2019 there were no gains and some further setbacks in nuclear arms control. The USA withdrew from the 1987 Treaty on the Elimination of Intermediate-Range and Shorter-Range Missiles (INF Treaty) and Russia formally suspended its obligations under it. Uncertainty continued about whether the Moscow and Washington bilateral 2010 Treaty on Measures for the Further Reduction and Limitation of Strategic Offensive Arms (New START) would be extended beyond its current expiry date of February 2021. Additionally, discussions on denuclearization between the Democratic People’s Republic of Korea (North Korea) and the USA lost traction during 2019 and by the end of the year, the Iran nuclear deal (2015 Joint Comprehensive Plan of Action) was largely non-functional. Amid the threat of sanctions by European countries to Belarus in the midst of 2021, the arrest of Roman Protasevich, one of the Belarussian dissidents who have been a constant thorn in Lukashenko’s side. Protasevich was pulled off the plane, along with several other Belarusian and Russian nationals. Vilnius has become a hub of opposition to Lukashenko’s rule, with Lithuania rejecting Lukashenko’s legitimacy and providing support and protection to exiles. However, sooner or later, it turns Belarus will become Europe’s North Korea issue.

Switzerland has gained the support of the Senate on December 20, 2019, and followed by a public referendum on March 7, 2021, to implement the IE-CEPA. In IE-CEPA negotiations, Switzerland agreed to accept the certification of sustainable palm Indonesia, the Indonesia Sustainable Palm Oil (ISPO). As for Norway and Iceland has completed their ratification on December 13, 2019, and January 29 2020. Liechtenstein is still in the process of ratification.

Indonesia has full confidence through the implementation of the IE-CEPA implementation in the Comprehensive Economic Partnership Agreement. In the future, it will bring Indonesia’s economy to be stronger, more competitive, and attractive to investors from EFTA’s developed countries. The government needs to take strategic policies to face global challenges which are currently full of uncertainty and promote economic recovery after the Covid-19 pandemic. One is through the Agreement’s IE-CEPA.

Happy Europe Day 2021

On behalf of the Indonesian Community of Europe Studies, we wish to extend our congratulations on the anniversary of Europe Day 2021.

Selamat Hari Eropa 2021.

Together we are celebrating peace and unity, as well as fight Covid-19 to recover stronger.

INDONESIA-FRANCE RELATIONS: STRATEGIC OPPORTUNITIES IN THE INDO-PACIFIC
Source: Ambassade d’Indonésie en France (2020)

Writer: Hendra Manurung is currently a doctoral candidate in international relations at Padjadjaran University, Bandung

In an international context marked by uncertainty and the increase in unilateralism, France’s priority is to propose an alternative: a stable, multipolar order based on the rule of law and free movement, and fair and efficient multilateralism. The Indo-Pacific region is at the heart of this strategy. This strategic region has major global importance in terms of biodiversity and climate change, particularly considering the demographic and economic weight of the area as well as the energy intensity of its natural resources. For France, the Indo-Pacific space is a geographic reality. France is present in the region via its overseas territories, and 93% of its exclusive economic zone is located in the Indian and Pacific Oceans. The region is home to 1.5 million French people, as well as 8,000 soldiers stationed in the region.

France is likely to intensify our mobilization in regional organizations, starting with ASEAN, which aims to remain at the heart of the construction of a multipolar Asia, and of which we are now a development partner, as well as in the Indian Ocean Rim Association, the Indian Ocean Community, the Pacific Community, and the Pacific Islands Forum. Henceforward, France’s strategy for the Indo-Pacific has become one of its priorities for international action since launched by the President of the French Republic during his Garden Island speech in Sydney, Australia in May 2018. In 2021, three years later, the strategy’s implementation is now producing tangible results and major progress in France’s commitments in the region. Paris wants to be more involved in the resolution of regional crises, in the securing of the main shipping routes and in counter-terrorism efforts, including terrorist financing, radicalization and organized crime. Further, it wants to strengthen the ties that bind the countries of the region on the basis of converging visions and shared interests, including with Indonesia, Australia, India, Japan, Malaysia, New Zealand, Singapore, South Korea and Vietnam, while deepening its relations with China, in the strategic framework that is now that of Europeans concern.

The Indo-Pacific has also become France’s strategic geopolitical and geo-economic reality. The global economy’s centre of gravity has shifted from the Atlantic to the Pacific. Six members of the G20, such as Australia, China, India, Indonesia, Japan and South Korea are located in the region. The maritime trade routes linking Europe and the Persian Gulf to the Pacific Ocean, via the Indian Ocean and South-East Asia, have become very important. The region’s growing share of world trade and foreign investment means that it is at the forefront of globalization and tremendous digital technology advance.

The enhancement of bilateral relations between Indonesia and France is pursued in order to achieve the mutual benefit interests and welfare of the people of the two countries, as well as to strengthen relations in various fields, particularly defence, trade, investment, tourism, culture, industry, economy, digital technology, as well as international cooperation.

Indonesia and France bilateral relations have been going on for 70 (seventy) years and have been well established since September 1950, and now both countries continue to improve as identified from the cooperation in various sectors. This cooperation is also evident from a number of dialogue activities and visits between officials of the two countries, both in a bilateral and multilateral framework, as well as mutual support in various nominations/candidacies in international organizations. Since 2011, right on the 60th anniversary of diplomatic relations between Indonesia and France, the two countries have agreed to forge a strategic partnership. Lion Air bought 234 Airbus aircraft in 2013. Although Airbus is a European program, the planes are made in Toulouse and France is recognized for its technologies and its innovative abilities. Last September 2014, Telkomsel chose Thales Technologies and Arianespace to launch its Telkom 3S satellite by 2016. The two countries agreed to establish a Strategic Partnership during the official visit of Prime Minister François Fillon to Indonesia from 30 June to 2 July, which focused on five areas of cooperation, namely: 1) Trade and investment, 2) education, 3) industry defence, 4) socio-cultural / people-to-people contacts, and 5) handling the impacts of climate change.

Henceforth, as one of the strategic economic cooperation partners, the government always maintains and improves bilateral relations with France that have existed for 70 years (1950-2020). In the midst of the global crisis due to the Covid-19 pandemic, maintaining close relations between one country and another need to be maintained sustainably, likewise the emphasis on the relationship between the government and the business world in one country with other countries is also becoming more important. Indonesia and France need to strengthen economic cooperation to face the challenges caused by the Covid-19 pandemic. Among other things, by always maintaining dialogue, including maintaining the flow of goods, especially food, medicine and medical equipment. In June 2020, Indonesia appreciates the assistance to develop health infrastructure in the Covid-19 pandemic that occurred due to the collaboration between Agence Française de Development (AFD) and PT Sarana Multi Infrastruktur (SMI).

This strategic partnership cooperation continues to be well established, until in March 2017, President François Hollande visited Jakarta and held a bilateral meeting with President Joko Widodo. The two leaders agreed to continue to strengthen bilateral cooperation between Indonesia and France, particularly in the fields of the creative economy, education, maritime affairs, sustainable cities development, energy, defence, and infrastructure. Shortly thereafter, President Joko Widodo also met President Emmanuel Macron, who officially became President of France on 14 May 2017, at the G20 Summit meeting in July 2018 in the City of Hamburg, Germany.

Indonesian government has always been committed to prioritizing public health and reviving the economy, prioritizing cooperation with various parties, implementing good government governance and reducing inefficient bureaucracy, and eliminating overlapping regulatory rules.

French entrepreneurs investments have entered into several lines of business in Indonesia. Especially since the visit of the French President to Indonesia on March 29 2017, there have been a number of bilateral agreements in the maritime and fisheries sector, creative economy and sustainable urban development. In addition, France which is well-known for the Eiffel Tower is one of Indonesia’s main export markets in Europe. Indonesian main commodities consist of palm oil, electrical machinery and equipment, rubber, footwear, furniture, and so on. France is also an important partner in development and environmental cooperation. In the first quarter of 2020, the investment disbursed by France to Indonesia was US$ 754 million, an increase from US$ 702 million in the same period in 2019.

Meanwhile, in terms of investment, Indonesian Investment Coordinating Board noted that the realization of French investment in Indonesia reached US$ 16.89 million for 255 projects (2019). This is a significant increase compared to the same period in 2018 which was valued at US$ 13.10 million for 186 projects. At present, Indonesia’s national development is related to the development of the implementation of Indonesian policies in the face of the Covid-19 pandemic, including the Exit Strategy, the National Economic Recovery Program and the Omnibus Law.

In the field of education, the French government together with Indonesia formed a joint working group cooperation forum, which includes, among other things: the double degree program at Masters and the Joint Supervision program at Doctoral Strata which is co-financed. The number of Indonesian students in France is 425 people, which is the highest in the last five years, from 2011 to 2016. Meanwhile, vocational secondary education cooperation has been established through a number of apprenticeship/internship programs in France attended by several vocational school teachers.

The defense cooperation between Indonesia and France is strengthened recently due to the two countries awareness in independence of managing the defense sector, including military tools and personnel maintenance.

Thereafter, as strategic partners, the relations between the two countries have been going well and open up great opportunities to increase defense cooperation. Indonesia needs to strengthen cooperation with France in an effort to strengthen and modernize the main tools of the defense system and advance the national defense industry. It is expected that the mutual cooperation will be established and benefit mutually in accelerating the progress of the defense industry in Indonesia as well as strengthening the Indonesia military defense system through technology transfer, increasing the use of local content and also increasing human resource capacity, as well as French collaboration to make Indonesia a key part of global production in defense equipment products. In the field of defense cooperation, bilateral cooperation between the two countries is based on the 1996 Memorandum of Understanding between Indonesian Ministry of Defense and the French Ministry of Defense in the fields of: cooperation in military equipment, logistics and defense industries. This cooperation was further enhanced through the holding of Military Bilateral Talks between the Indonesia military forces (TNI) Headquarters and the French, namely the AP French Headquarters, namely for the fields of education, information exchange, and dialogue forums.

Meanwhile, for socio-culture, there were a number of Franco-Indonesian associations in France that were particularly active in the arts and culture sector. These associations also contribute to improving good relations, especially people-to-people-contact, between French and Indonesians. On the other hand, there are also a number of universities in France that have Indonesian language programs, which are an asset in introducing Indonesian culture in France. In France every year there are a number of cultural and tourism promotion activities carried out by Indonesia and the local government of France.

During the visit of French President Francois Hollande to Jakarta in March 2017, Indonesia and France signed 5 (five) memoranda of understanding, namely: in the field of urban development sustainability, tourism, defense, science and research, and the exchange of research personnel. Furthermore, with regard to maritime cooperation, Jakarta has requested Paris cooperation in fighting IUU fishing, including making Illegal, unreported and unregulated (IUU) fishing into transnational organized crime.

Meanwhile for the creative economy sector, cooperation in the fields of cinematography, film, fashion and the digital economy will continue to be developed. Further, in the tourism sector, France sees Indonesia as a very large archipelagic country so that transportation needs to be developed and will also increase the number of tourist visits.

Indonesia and France also have a very strong cooperation closely on various international issues, including the issue of Palestinian independence, world peace forces, and against extremism and terrorism. The two countries agreed to fight for this achieving Palestinian-Israeli peace through the concept of two state solutions. Indonesia and France as contributors to the peacekeeping force world under the United Nations, agreed to increase cooperation, including increasing the capacity of the French language for Indonesian peacekeeping forces. The existence of a peacekeeping force is a commitment between France and Indonesia to jointly eliminate conflicts in the world. The spread of tolerance values and eliminate xenophobia as a joint effort to eradicate extremism and global terrorism.

France perceives Indonesia with 270 million inhabitants, which has citizens of the world’s largest Muslim majority country, capable of presenting a tolerant and plural diversity. This is an inspiration for France, namely upholding the principles of freedom and tolerance to eliminate terrorism without discrimination.

It is expected that France together with Indonesia will be able to cooperate more and make new breakthroughs towards significant partnerships in the fields of defense, economy, politics, security, as well as socio-culture. Both countries cooperation supposes are not only beneficial for bilateral interests in short and medium-term, but also regional and international interests, including through mutual support in international forums continuously.