Indonesia-Argentina to strengthen agriculture, F&B trade
Businesspeople in the agriculture and food and beverages (F&B) sectors are working to enhance bilateral trade with Argentina by exploring more opportunities for trade in goods as well as negotiating lower import tariffs.
Argentina is not among Indonesia’s main export destinations, which is reflected in the latter’s agriculture exports. Indonesia exported a total of US$25.1 million in agricultural products to Argentina last year but imported $1.38 billion from the South American country in the same period, leading to a $1.13 billion deficit on Indonesia's side.
The Indonesian Food and Beverage Producers Association’s (Gapmmi) vice chairman for international cooperation, Johan Muliawan, said the main hurdle to fixing the imbalance was high tariffs applied on Indonesian F&B products by Argentina.
“Most of our F&B products are actually competitive enough to enter the Argentinian market [...] but the average import duties [imposed by Argentina] for these products are over 25 percent,” Johan told The Jakarta Post after a business matching meeting between companies of the two countries hosted by the Indonesian Chamber of Commerce and Industry (Kadin) on Monday.
The meeting followed the state visit of Argentinian President Mauricio Macri to Indonesia in late June.
“On the other hand, our import duties for Argentinian goods such as raw materials and finished products are not that high, only about 10 percent on average,” he added.
Indonesia ranks 27th as the largest exporter of agriculture products to Argentina, thanks to its horticulture and plantation shipments. The country still ranks below Southeast Asian neighbor Thailand on the list, Johan said.
He urged policymakers to resolve the tariff issues through a bilateral preferential trade agreement or even better, a free trade agreement so that businesses would be able to make their way into Argentina and other Latin American nations in the long run.
“We hope that Argentina will be in the [top 25 investors] list within the next two or three years,” he said.
In 2018, overall foreign direct investments in the F&B sector were down by 33.1 percent from 2017, much deeper than the overall FDI decline of 8.8 percent, Johan said, citing Coordinating Investment Board (BKPM) data. Argentina was not even included in the top 25 countries of origin for F&B investments in Indonesia between 2014 and 2018.
Meanwhile, data shows that agriculture products comprised 60 percent of Argentina’s export in 2018, as opposed to Indonesia, which had less than 2 percent of its exports coming from the sector in the same year.
“Part of our corporation is to share the knowledge of what we are doing, so we are open to speaking with anyone who is interested in the way we are doing things in Argentina,” Pedro Manuel Vigneau, the undersecretary for agro-industrial markets at the Argentinian Ministry of Production and Labor, told the Post on the same occasion.
He brought along representatives of a dozen Argentinian agriculture and F&B medium and large enterprises to attend the meeting with Kadin.
Private agricultural companies in his country, Vigneau said, were ready to invest in advanced and sustainable farming and F&B production in Indonesia, claiming that Argentina excelled in the sectors compared to other agriculture-oriented countries.
“We hope this trade [meeting] will be a complete success for both sides. We are also aware that we should buy [Indonesian agricultural goods], so we wish to build a strong relationship and a win-win situation for Argentina and Indonesia,” he added.