JAKARTA - The economic fallout from the Covid-19 pandemic has hit Indonesia hard, and the Southeast Asian largest economy urgently needs new growth engines.
Utilising FTAs offers local companies a compelling list of benefits, including access to new markets, tariff concessions, and the ability to clear goods more quickly and easily. With their focus on opportunities in overseas markets, FTAs can also promote supply chain diversification. In practical terms, Indonesian businesses would follow one set of procedures instead of navigating through different sets of rules when trading with their RCEP partners.
The trade negotiation has faced a challenge over palm oil following a decision by the EU to phase out the use of biofuel and biodiesel manufactured from palm oil by 2030. Currently, these are excluded from tariff reduction commitments, alongside some canned tuna products. Japan is Indonesia's second-largest export destination and third-largest import source.
FTAs have the potential to greatly aid companies' efforts in this regard as they seek to put diversification plans into action.