Indonesia-Netherlands Trade Alliance

The Dutch invitation to form a trade alliance should be seen as an opportunity for Indonesia to build a real alliance of economic cooperation to help the country get out of global economic pressure.

KOMPAS/KRIS RAZIANTO MADA

Indonesian Ambassador to the Netherlands I Gusti Agung Wesaka Puja hands over woven fabric to the king of the Netherlands, Willem-Alexander, Tuesday (18/2/2020), in Amsterdam. Together with Queen Maxima (right), King Willem-Alexander will visit Indonesia in early March. The visit is to further strengthen Indonesian-Dutch relations.

Even though it is not among the 10 most important trading partners, the Netherlands is Indonesia\'s second-largest trading partner in Europe, with bilateral trade currently still in surplus on the Indonesian side. The Netherlands is also is the largest investor in Indonesia among the European Union countries, while Indonesia is the most important Dutch trade and investment partner in Southeast Asia.

If it can be realized, this trade alliance could mark a new round of trade cooperation that could sharply boost bilateral trade between the two countries and be mutually beneficial to both parties. In this case, the Netherlands has an interest in utilizing Indonesia\'s position to penetrate the Asian giant market as the world\'s fastest-growing region, while the Netherlands can be another gate for Indonesia to enter the EU market, Indonesia\'s third-most important export destination.

There are still many obstacles to taking advantage of this potential. Historical relations between the two countries have not helped much, while bilateral diplomatic relations have been marked by ups and downs. Indonesia still faces obstacles and discrimination in trade with the EU, and back home, in the Asian region, Indonesia finds it hard to compete with other exporters and link itself up to global supply chains.

The plan of an Indonesian-Dutch trade alliance is expected to gain momentum with the state visit of King Willem-Alexander and Queen Maxima to Jakarta from March 10-13, along with a trade mission consisting of 135 Dutch business representatives. The Netherlands believes this alliance will be as successful as it has been with other countries. In this case, the Dutch superiority in technology and innovation is believed to greatly support the success of the alliance.

KOMPAS/KRIS RAZIANTO MADA

Dutch-Indonesian Business Meeting -- Indonesian Ambassador to the Netherlands I Gusti Agung Wesaka Puja (facing camera) talks with a number of Dutch businessmen on Tuesday (18/2/2020) in Amsterdam.

The question is, how can Indonesian entrepreneurs take advantage of this opportunity? We are interested in this trade alliance that involves fields of special interest to Indonesia. We also hope this alliance can help our micro, small and medium enterprises (MSMEs) expand their export markets. MSMEs accounted for 60.34 percent of GDP and for 98.87 percent of employment in 2018. They only contributed 15.7 percent to national exports, however.

The trade alliance is expected to support efforts to diversify Indonesia\'s export destinations amid economic slowdown in China and the Unites States, two of Indonesia\'s most important export markets. Indonesia also needs to attract more investment to develop a high value-added and export-oriented manufacturing sector in order to reverse deindustrialization and overcome the chronic current account deficit – especially in the midst of slowing commodity exports, still the mainstay of our exports.

Learning from economic agreements with other countries, we can only take opportunities and benefits if there is a readiness from the Indonesian side, both in negotiating and following up on these agreements. We don\'t want to end up just biting our fingers and not getting anything because we are simply not ready