10 June 2019

By Mary Fatima Barrameda | Market Innovation Division | DTI-Export Marketing Bureau

Published also in Business Mirror

INDONESIA is the largest economy in Southeast Asia and one of the emerging market economies of the world. With a population of 260 million, Indonesia is the fourth largest country in terms of population size. The country’s gross domestic product (GDP) expanded 5.17 percent in 2018, up from a growth rate of 5.07 percent in the preceding year.

In 2018 Indonesia was the ninth trading partner of the Philippines, 14th as export market and sixth as import supplier. Total bilateral trade was valued at $7.81 billion. Exports to Indonesia increased by 21.79 percent, from $724.21 million in 2017 to $881.99 million in 2018. 

The top 10 Philippine exports to Indonesia accounted for 52.53 percent of the total exports that include semiconductor devices, cathodes and sections of cathodes of refined copper, input or output units, tobacco, and polypropylene. Imports also increased by 9.05 percent, from $6.35 billion in 2017 to $6.93 billion in 2018. 

The top 10 Philippine imports from Indonesia comprised 61.38 percent of the total imports that include other coal, motorcycles, coffee-extract preparations and bituminous coal. This resulted in the Philippines’s having a trade deficit of $5.53 billion with Indonesia.

 To help address the widening trade deficit between the Philippines and Indonesia, the Indonesian government agreed to ease restrictions on the Philippines’s agricultural exports during the bilateral meeting in April 2019. The Government of Indonesia decided not to extend the imposition of dumping duty on Cavendish bananas originating from the Philippines and recognized the Davao region, Northern Mindanao, and Soccsksargen as pest-free areas for banana production.

Both parties also agreed to form a Technical Working Group to continue to discuss other issues including non-tariff measures affecting the two countries. They also agreed to conduct business missions alternately between Manila and Jakarta.

As Indonesia is a party to the Asean Free Trade Agreement, Philippine exporters can avail themselves of zero tariffs on most products when exporting to Indonesia.