Indonesia and Malaysia agreed earlier this month to take measures to increase bilateral trade, including by increasing trade across mutual border areas and encourage bilateral investment.

Speaking to reporters after a meeting with Malaysian Trade and Industry Minister Dato’ Sri Mustapa Mohamed in Jakarta on Monday August 2, Indonesian Trade Minister Mari Elka Pangestu said that by opening more

trade routes in border areas, the bilateral trade could be increased to at least US$15 billion this year.

She said the total bilateral trade value, which last year fell to $12.5 billion, had bounced back over the past several months. From January to May, the bilateral trade rose about 90 percent to $7.1 billion from $3.7 billion in the same period, last year.

“Given this positive trend, we hope we can reach the peak recorded in 2008 when the two-way trade reached $15.3 billion,” she added.

Manufactured goods were the largest exports to Malaysia last year, reaching $1.5 billion, followed by minerals with $1.3 billion and vegetable oils with $1.1 billion, the Indonesian Embassy in Malaysia reported.

Mari said the meeting with her counterpart had also sought to encourage bilateral investment.

From 2004 to 2009, Malaysia invested $1.5 billion in Indonesia, the second-highest country to country investment among Southeast Asia countries that year. Most of the investment went to the plantation, telecommunications, banking and oil and gas sectors. Mustapa said he had discussed with Mari about how to encourage Indonesian businessmen to invest in Malaysia.

“The value of Indonesia’s investment in Malaysia is still very low,” he said. From 2004 to 2009, the total value of Indonesia’s investment in Malaysia was only $534 million.

“Indonesian companies mostly invest in tourism and manufacturing sectors,” Mustapa said.

In the meeting, he said he had conveyed aspirations from Malaysian businessmen, including about a 10 percent import tax applied to Malaysian products which he said was burdening Malaysian businessmen.

“We hope the Indonesian government can reduce the tax,” he said. “We also discussed some other non-tariff barrier issues to ease trade between the two countries.”

The meeting also discussed preparations to hold a joint committee meeting on trade and investment in Pontianak, West Kalimantan, in October. The meeting is expected to finalize the border trade agreement between the two countries.

Mustapa said that during his visit, he had also met with Coordinating Economic Minister Hatta Rajasa.

News Source: The Jakarta Post