Kenya and Indonesia have entered into negotiations for a preferential trade area deal as the two nations look to increase investments and trade between them.
The agreement will seek to shore up market access through the slashing of tariff barriers and creation of a favourable business environment.
Balance of trade between Kenya and Indonesia has been in favour of the Asian country and the new talks are majorly aimed at reversing the drop in the volume of traded goods that the two countries witnessed in 2022.
President William Ruto who witnessed the MoU signing said that the agreement will be cognizant of Kenyas obligations to our EAC members and other trade arrangements within the continent.
“We have agreed to enhance and expand the partnership between Kenya and Indonesia with focus on four key issues: Food security, mining, renewable energy and health,” said Ruto.
According to the president the agreements are centred around the sectors of oil and gas, pharmaceuticals, edible oils, and agriculture, including livestock exports and apparel production.
The talks come at a time that the value of Kenya’s imports from Indonesia slumped by an estimated 38.8 percent to Sh27.13 billion in 2022, from the previous year’s Sh44.4 billion.
However, Kenya’s export to Indonesia increased to Sh1.14 billion in 2022, according to the latest economic survey 2023.
The new pact will also see discussions between the states revolve on trade and investment as well as collaboration in higher education, basic education, and vaccine development.
Kenya and Indonesia also endorsed a Letter of Intent to bolster collaboration in the promotion of investment flows between Kenya and Indonesia.
“On our side as Kenya, we have chosen to extend visa-free entry not only to diplomatic A5 and service passport holders but also to all Indonesian passport holders,” the President said in his speech at statehouse.
Ruto added that Investment and trade between the two countries was valued at more than $600 million (Sh86.7 billion) last year.
The high-yielding areas of focus, will include textiles and apparel, energy, mining, and oil production and refining.
Widodo said that Kenya will be seeking the support of Indonesia to penetrate the Association of Southeast Asian Nations, a fast‑growing trade bloc in Asia.
He explained that Kenya will also work with Indonesia to attract global firms to invest in value addition chains.
President Ruto stated that the move will help Kenya grow its industries and attain a trade balance with Indonesia.
