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Indonesia – EU Unique Partnership through CEPA

In view of the importance at Indonesia and the European Union partnership through Comprehensive Economic Partnership Agreement (CEPA), The President Post and Financial Club Jakarta held a Breakfast Dialogue entitled “Indonesia and the European Union: A Unique Partnership for Prosperity”.

Participants of the dialogue were Julian Wilson, Delegation of the European Union to Indonesia and Brunei Darussalam, and ASEAN, David O’Sullivan, Chief Operating Officer of the EU’s External Action Service, Airlangga Hartarto, Chairman of Commission VI DPR-RI, Sofyan Wanandi, Chair of APINDO, and Emirsyah Satar, CEO of Garuda Indonesia and Vice Chairman of Kadin.

The dialogue discussed the commercial and investment relationship between Indonesia and the EU, specifically the start of negotiations of a Comprehensive Economic Partnership Agreement (CEPA) between two parties.

“We already are a major trading and investment partner of Indonesia. We believe it is very beneficial in terms of trade and investment to have an agreement with Indonesia. It is a win-win solution for both sides,” O’Sullivan said.

If CEPA could be adopted soon, more European investors will come to Indonesia as pledged by EU Ambassador to Indonesia Julian Wilson.

Airlangga Hartarto, Sofyan Wanandi, and Emirsyah Satar agreed that the EU is a unique and complementary commercial partner of Indonesia, providing jobs for Indonesians through substantial investments in value-adding sectors and boosting Indonesia’s financial reserves through its substantial trade surplus.

Sofjan Wanandi said that he expected EU investment to provide benefits to small- and medium-scale enterprises (SMEs), a sector on which Indonesia relied heavily for growth.

Aside of common terms in trade agreement such as market access and investment, the CEPA also consists of trade facilitation and capacity building. The agreement would apply gradual tariff reduction within a period of nine years, eliminating 95 percent of tariffs and possibly even the remaining 5 percent. The capacity-building program would include a permanent forum for business-to-business and business-to-government technical dialogue and joint financing for programs.

Europe is the second largest investor in Indonesia, but gets only 1.6 percent of its total investment in Asia last year while the remaining 98.4 percent went elsewhere. In 2011, European investment in Indonesia was $2.2 billion, the second largest after Singapore of $5 billion. Meanwhile, trade value of both sides reached $32 billion with surplus for Indonesia of $8 billion. EU companies also employ over 500,000 employees in Indonesia.

The dialogue was attended by ambassadors, prominent business leaders, among others Tomas Smetanka, Ambassador of Czech Republic, Jakob Friis Sorensen, Chairman of Eurocham, Haslam Preeston, Chairman of Britcham, Dr J Scott Younger, President Commissioner of Nusantara Infrastructure, Francois-Joseph Ossude, President Director of CMA-CGM, and others.

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