Chile hopeful of Indonesia deal

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Tom Azzopardi

BY TOM AZZOPARDI

Chile hopeful of Indonesia deal

Chile moves a step closer to re-entering market through the port of Jakarta after the two countries commit to trade deal

Chile hopeful of Indonesia deal

Chilean premier Michelle Bachelet

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Fruit exporters from Chile are expectant that they may regain access to the Port of Jakarta, Indonesia’s largest seaport, following a five-year absence after Chilean President Michelle Bachelet raised the issue with her Indonesian counterpart Joko Widodo during a state visit to the Southeast Asian country last week.

The visit also brought fresh hope that the two countries could be close to signing a major trade deal.

During a ceremony at the presidential palace in Jakarta on 12 May, the two presidents signed a Letter of Intent expressing their shared desire to complete negotiation of the Comprehensive Economic Partnership Agreement by the end of this year.

Negotiations of the deal, which was first studied in 2009, have been delayed by the change of government in Indonesia following the assumption of Widodo in October 2014.

In essence a free trade agreement covering goods and related matters, the instrument would drastically reduce the tariffs paid on a huge range of products traded between the two countries, including farm produce, giving Chilean fruit a key advantage over rivals from countries without such a deal.

But the agreement will mean little unless Chile’s fruit exports can enter through Jakarta, the country’s capital, largest city and home to the largest wholesale food markets.

In 2011, Indonesia issued a rule limiting imports of crops, fruit and vegetables to four other ports located through the country in order to reduce the risk of entry and spread of pests.

Several countries, however, have won exemptions to the rule including Australia, Canada, New Zealand and the US.

Instead, Chilean fruit generally enters Indonesia via the Port of Surabaya, 800km east of Jakarta and the other major population centres, which significantly limits its ability to access and compete in the country’s main fruit markets.

Last year Chile exported US$6.5m worth of Red Globe grape to Indonesia, down from around US$30m FOB (or 1.2m cartons) before the ban.

Although the Chilean authorities have been seeking recognition of its sanitary status from Indonesian counterparts they have so far had little success.

“As a country we are fruit fly free but we have to demonstrate this paperwork and that is what [the farms inspectorate] SAG is doing,” Paulina Nazal, head of Chile’s international trade office Direcon, told reporters during President Bachelet’s Asian trip.

Earlier this year, the country adopted new rules for preventing and combating fruit fly outbreaks and appointed an agricultural attaché to its embassy in the Indonesian capital to improve relations with the sanitary authorities there.

While the sanitary approval is a separate issue from the trade deal, Chile hopes that Jakarta’s commitment to conclude negotiations on the agreement in the coming months is a good omen that approval to regain access Jakarta could be forthcoming.

“We believe that the visit by the president is going to help us a great deal to enter through the Port of Jakarta again. We expect that this will happen soon,” Ronald Bown, president of the Chilean fruit exporters association Asoex, told Fruitnet.

That should not only help Chilean exporters gain better access to Indonesia’s market of around 300m consumers but also provide a platform to better access markets in the rest of Southeast Asia, many of which already have trade agreements in place with Chile.

 

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