•The current trade balance favors Indonesia and Kenya hopes to close the gap by tapping into Indonesia's rich markets for a variety of items.
•The Economic Survey 2023 shows Kenya imported goods worth Sh27. 1 billion from Indonesia last year, against an export value of Sh1.1 billion.
Kenya and Indonesia are keen to have a Preferential Trade Agreement (PTA) that will enhance trade between the two countries, currently in favour of the Far East nation.
Investments, Trade and Industry CS Moses Kuria and Indonesian Minister for the Coordinating Ministry for Maritime Affairs and Investment, Luhut Pandjaitan , are exploring the possibility of a PTA between the two countries.
In a statement yesterday, Kuria’s ministry said the two who met in Jakarta on Wednesday recognised the potential benefits of an agreement in facilitating trade, reducing barriers, and “promoting a more favourable business environment”
A deal would give preferential access to certain products from each country.
This is by reducing tariffs but not by abolishing them completely. It is the first stage of economic integration between two parties or a trade bloc.
The two countries have so far signed a deal that will enable Kenya to export at least 700,000 heads of cattle annually.
They have agreed to hasten approval protocols that will enable the first shipment of 20,000 heads of cattle by August 2023.
The current trade balance favors Indonesia and Kenya hopes to close the gap by tapping into Indonesia's rich markets for a variety of items.
The Economic Survey 2023 shows Kenya imported goods worth Sh27. 1 billion from Indonesia last year, against an export value of Sh1.1 billion.
The Indonesian imports were however at a five-year low and a drop from Sh44.4 billion in 2021, while Kenya’s exports were a gain from Sh912 million.
Kenya's key exports to Indonesia are tea, leather, metallic and peroxy salts, tobacco, vegetable textile fibers, essential oils, jute and other textile fibers, vegetables (fresh, chilled, frozen), coffee, and coffee substitutes.
Kenya imports palm oil, paper and paperboard, animal or vegetable fats and oils, margarine, natural rubber, electrical and non-electrical equipment, glass, apparel and clothing accessories.
The Wednesday meeting between Kuria and his Indonesian counterpart looked at a wide range of topics, including trade and investment cooperation, economic growth, and strategies for sustainable development.
“Both parties expressed their commitment to enhancing bilateral trade and exploring new avenues for collaboration,” CS Kuria’s office said in the statement.
Indonesia President is expected to visit Kenya in the coming months, in what is expected to further strengthen bilateral relations and open new avenues for cooperation across various sectors.
According to Kuria, the two countries are keen to optimise production for exports from locally available raw materials and promoting value addition along the value chains within their respective countries.
A key area includes manufacturing in textile and apparel sector, where the two have expressed their commitment to promoting investment and technological advancements to boost production and exports.
“Both ministers discussed strategies to facilitate the post-Covid -19 recovery and growth of exports in their respective countries. They acknowledged the impact of the pandemic on global trade and emphasised the need for resilient and adaptive measures to revitalize their economies,” the statement reads in part.
They are keen on providing fiscal and non-fiscal incentives to promote investment and industrialisation, particularly through Export Processing Zones (EPZs) and industrial parks.
The ministers acknowledged the significance of business-to-business (B2B) engagement in fostering stronger trade ties, and looked at increased collaboration between companies from both countries and emphasized the importance of nurturing relationships between business communities.
In 2017, the Kenya National Chamber of Commerce and Industry (KNCCI) and the Indonesia Chamber of Commerce signed a Memorandum of Understanding to boost trade and investment cooperation as well as information exchange.
“The ministers agreed on the establishment of a robust monitoring and evaluation framework to ensure the effective implementation of the agreed plans and ideas. They emphasized the importance of regular assessment and feedback mechanisms to measure progress and address any challenges that may arise,” CS Kuria’s office said.