Indonesia-Africa Forum in Bali seeks expansion of trade and investment

Indonesia's drive to diversify export markets is reaching a new path with participants in this week's second Indonesia-Africa Forum seeking closer economic partnerships between Southeast Asia's largest economy and the world's second-most populous continent.

Energy, food and healthcare sectors were the main sectors discussed in the three-day forum from Sep 2-4.

Leading officials from Indonesia and 54 African countries as well as from Timor Leste convened in the archipelago's most popular tourist island of Bali to discuss ways of strengthening economic diplomacy between Indonesia and African countries and boosting trade and investment.

Among them were Liberia President Joseph Nyuma Boakai, Rwanda President Paul Kagame, Ghana President Nana Akufo-Addo, and Zimbabwe Vice-President Kembo Dugish Campbell Muleya Mohadi. Joining them was Timor Leste Prime Minister Xanana Gusmao, along with ministers, entrepreneurs and scholars. The meeting went together with High Level Forum on Multi Stakeholders Partnership.

Indonesian President Joko Widodo opened the forum on Monday in the presence of president-elect Prabowo Subianto, who will be sworn in next month.

Widodo said that the Indonesia-Africa Forum and the High Level Forum on Multi Stakeholders Partnership were held to materialize the commitment made by participating countries in the 1955 Asia-Africa Conference in Bandung, Indonesia.

Indonesia-Africa partnership had so far seen a rapid increase in trade volumes between the two sides. The amount is six times bigger than that reached in 2018, the first Indonesia-Africa Forum, also held in Bali, the president said.

"Even, Indonesia-Africa Forum this year has recorded businesses agreements that reached a total of $3.5 billion," Widodo said. The amount is six times bigger than that reached in 2018, when the first Indonesia-Africa Forum was held, also in Bali.

Along with Eastern Europe, Central Asia, South Asia and Latin America, Africa has so far been a "non-traditional" market of resource-rich Indonesia, whose export products have mainly gone to ASEAN, China and the United States.
Indonesia exports to Africa palm oil, paper, noddle, biscuit, pharmaceutical products, beauty items. Tire, coffee and furniture are among the country's potential products for the African market.

Africa exports to Indonesia cows, soybean, crude oil and iron, and potential products for the Indonesian market include critical minerals such as cobalt, lithium, and steel.

In the Bali forum, Indonesia's state oil and gas firm PT Pertamina, which has had operations in the upstream sector in Algeria, Gabon, Nigeria, Angola, Namibia and Tanzania over the past decade, reached new agreements for its operation expansion in Africa.

Fithra Faisal Hastiadi, executive director of Next Policy and an international economics lecturer at the University of Indonesia, said Africa is a potential market for Indonesian products, though presently, Africa is not as big as the Asian market.

Historically, Indonesia and Africa have been close to each other, which could support Indonesia opening manufacturing operations in the continent so as to reduce logistic costs, Hastiadi told this correspondent.

He said Indonesia could also follow the routes taken by China, which has had an even stronger presence in Africa.

"We just go where China goes. This is because the countries where China does business are the places that have larger economic potentials," Hastiadi said.

Richard Mshomba, a Tanzania-born economics professor at La Salle University in Philadelphia in the United States, said via email that the Indonesia-Africa Forum in Bali can create diplomatic space for increased economic cooperation.

He said in general Indonesia is an insignificant trade partner for Africa, although that varies by country. For the 2018-22 period, Sub-Saharan African exports to Indonesia were only 1.2 percent of its total exports. Its imports from Indonesia were even less, only 09 percent of its total imports.

Yet, "Indonesia should not approach African countries as if it was trying to compete with China," said Mshomba, who provided a systematic study of Africa in relation to the World Trade Organization.

Indonesia can try to find opportunities to invest in mining and energy as it has done in Kenya and Tanzania, and can also take advantage of African countries having easier access to the EU and the US markets, Mshomba said.

Muhammad Habib Abiyan Dzakwan, a researcher at the department of international relations of the Center for Strategic and International Studies in Jakarta, said Indonesia should not ostensibly believe that meetings like the Indonesia-Africa Forum can achieve two goals on one strike: generating concrete economic benefits and excercising leadership on the global stage.

"Adequate resources and public awareness are crucial. Unfortunately, African countries are yet to enjoy these privileges from Indonesia. Not only did the country spend less than 1 percent of its gross domestic product on foreign policy, but limited amount is also concentrated on management support and presence at various multilateral platforms," Dzakwan said in an op-ed article in the Sept 4, 2024, issue of The Jakarta Post.

Building more footprints in Africa matters as long as rational economic calculation and analyses precede and complement the decision, not merely diplomatic interests, Dzakwan told this correspondent.

The writer is a freelance journalist for China Daily.