Trade Minister Zulhas Optimistic Ratification II-PTA Pacu Indonesia-Iran Economy

Minister of Trade (Mendag) Zulkifli Hasan. (Photo: Doc. Ministry of Trade)

JAKARTA - The Minister of Trade (Mendag) Zulkifli Hasan said he was optimistic that the Indonesia-Iran Preferential Trade Agreement (II-PTA) ratification or the approval of trade preferences between the Government of Indonesia and the Government of the Islamic Republic of Iran would improve the economy of the two countries.

"We are optimistic that this II-PTA (Indonesia-Iran Preferential Trade Agreement) ratification will have a positive impact on trade and the economy of the two countries (Indonesia-Iran)," said the Trade Minister during a Working Meeting with Commission VI DPR RI in Jakarta, quoted from Antara, Monday 8 July.

The Trade Minister explained that II-PTA is the second trade agreement between Indonesia and countries in the Middle East region as well as Indonesia's first trade agreement which includes the regulation of the Trade Imbal (Counter Trade) as an alternative trade transaction.

According to him, II-PTA will support the economic recovery after the COVID-19 pandemic and improve Indonesia's macroeconomic performance.

In addition, regulating trade returns will encourage increased trade transactions between the two countries.

He said the approval of II-PTA had been signed on May 23, 2023 at the Bogor Palace by the Minister of Trade of the two countries, witnessed by the President of the Republic of Indonesia and the President of Iran.

The man who is familiarly called Zulhas revealed that in the last five years 2019-2023, Indonesia's trade balance was recorded as a surplus. Where, in 2023, Indonesia's total trade reached 206.9 million US dollars with an export value of 195.1 US dollars, and imports 11.7 million US dollars, so that Indonesia had a surplus of 183 million US dollars.

Furthermore, Zulhas said that Iran is an open country with a strategic position so that it has the potential to become a liaison for trade in the Middle East, Central Asia, and South Asia.

"Iran is also a potential market for Indonesia with a population of 88 million people. Iran's relatively high tariff structure is the main obstacle for Indonesian products to be more competitive," said Zulhas.

Therefore, Zulhas said that the preference for the II-PTA tariff over Indonesia's main number of exports to Iran and its surrounding region is considered to increase Indonesia's trade balance surplus.

This II-PTA agreement was signed on May 23, 2023 at the Bogor Palace by the minister of trade between the two countries and witnessed by the President of the Republic of Indonesia and the President of Iran.

This is Indonesia's second trade agreement with the State in the central eastern region, and Indonesia's first trade union which has trade returns (Counter Trade) that are now starting to demand a lot.

Egypt also intended a counter trade as an alternative trade transaction.

Zulhas added that the II-PTA ratification will have a positive impact on Indonesia because it will get an elimination and reduction in tariffs of 239 post rates including mineral products; industrial products such as processed foods, there are pharmaceuticals, rubber, paper, textiles, and others.

Then, agricultural products include palm oil, other vegetable oil extracts, cocoa, tobacco, coffee, tea, spices, fruit, vegetables, and others. Including fishery products, namely fish.

"Indonesia-Iran PTA will increase Indonesia's exports to Iran to an estimated US$494 million by 2030, thus Indonesia will occupy a surplus of more than US$468 million in 2030," said Zulhas.

He hopes that Indonesia - Iran PTA can be ratified by presidential regulations soon so that it can be implemented in 2025 taking into account regulated content does not have a broad impact.

"The implementation mitigation of II-PTA is also carried out through socialization to all stakeholders as well as optimizing the free trade agreement (FTA) center and foreign representatives as supporters of the implementation of II-PTA approval," said Zulhas.

Deputy Chairman of Commission VI of the Indonesian House of Representatives, Mohamad Hekal, said that before holding a working meeting with the Ministry of Trade, he had previously held an internal meeting.

He said, from the results of the internal meeting of Commission VI of the DPR RI, he decided that he supports the trade preference between the Government of Indonesia and the Government of the Islamic Republic of Iran to be resolved by Presidential Decree.

"Before this working meeting started, we had held an internal meeting of the Commission (VI) which in our decision has decided that we will support this to be resolved by Presidential Decree," said Hekal.