- Despite Kenya maintaining a resident mission in Kuala Lumpur since in 1996, and Malaysia reciprocating in 2005, bilateral trade has been low.
- Kenya imported $855.1 million worth of goods from Malaysia in 2021, while it only exported $16.77 million.
Image: PCS
Indonesia embassy held its maiden Indonesia Nairobi Expo on May 13.
The embassy said the expo was a manifestation of Indonesia's efforts to expand and strengthen trade relations with Kenya.
At just about the same time, Trade Cabinet Secretary Moses Kuria was in Jakarta concluding a three-day visit that culminated in the signing of a Deal Book to guide further engagements with businesses, state agencies and investors.
Five days later, Singapore Prime Minister Lee Loong was in Nairobi for a state visit that centred on trade and investment.
Between May 23-26, Kenya will participate in the Thaifex Anagu Asia 2023 Food and Beverages Exhibition through the embassy in Bangkok on invitation by Thailand Coffee Association.
These events point to the trade potential Southeast Asia offers Kenya.
Southeast Asia is composed of 11 countries: Brunei, Burma (Myanmar), Cambodia, Timor-Leste, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand and Vietnam.
Ten of these countries – other than Timor-Leste - have joined hands to form the Association of Southeast Asian Nations. ASEAN promotes economic and security cooperation among members and according to the Council on Foreign Relations, as of April 2022, ASEAN countries have a total population of 662 million people and a combined GDP of $3.2 trillion.
The bloc has played a central role in Asian economic integration, joining negotiations to form the Regional Comprehensive Economic Partnership, the world’s largest free trade agreement, and signing six free trade deals with other regional economies.
Individually, Indonesia, Singapore, Thailand and Malaysia, offer different opportunities that Kenya can and should pursue.
Indonesia
Following a visit by then Foreign Affairs minister Monica Juma in 2019, an agreement was reached to open an embassy in Jakarta, which finally happened in March 2022.
The mission, as her successor Raychelle Omamo observed, will add the momentum in bilateral collaborations in trade and investment, agriculture and fisheries, education and human resource skills development, defence and security, ICT and Industrialisation, affordable healthcare, housing and urban development, culture and tourism, energy and mineral resources.
The more than 270 million people in Indonesia offer a big market as does the 600 million ASEAN population. In exchange, Kenya offers a huge market for Indonesia and a gateway to the East African Community, which has a population of close to 300 million, with the entry of DRC.
Through IndoNEX 2023, Indonesian companies had the opportunity to introduce their products to the East African region. The new embassy in Jakarta should thus take cue from this and organise such expos.
In a previous interview with the Star, Ambassador Mohamad Hery Saripudin said there is a huge potential for Kenyan businesses and they only need to be encouraged because there seems to be a perception gap.
"When you hear about Indonesia, you think, 'Ahhh, Indonesia is too far away'. Second, Kenyan businesses are already trapped in their comfort zone. They prefer to do business with their traditional market or counterparts, such as the US and Europe.
"But if they come out of that comfort zone, I believe every single product from Kenya can be accepted by Indonesians: coffee, tea, avocado, roses and many other products that you have comparative advantage on,” the ambassador said.
The volume of trade in 2021 was more than $500 million, which according to the envoy was still very low. However, looking at the increase in percentage in 2020, when the trade volume was $415 million - amidst Covid-19 - and again comparing with $234 million in 2019, there is an upward trajectory that needs to be exploited.
Singapore
Kenya and Singapore have had diplomatic relations for about 32 years. While Singapore does not have an embassy in Kenya, Nairobi maintains a consulate in Singapore.
Despite the limited diplomatic presence, the recent visit by PM Loong indicated the need for closer ties as acknowledged by both leaders.
President William Ruto said Kenya will consider Singapore's strategic location in South East Asia as a gateway to its products.
The PM acknowledged Kenya is one of Singapore’s important trading partners in sub-Saharan Africa, noting that despite Covid-19, bilateral trade in 2021 increased by almost a quarter year-on-year.
"Several Singapore companies are operating in Kenya in a variety of sectors, e.g. shipping, logistics and port management systems, agribusiness, hospitality, and Fintech solutions, amongst others. A delegation of Singapore companies is in Nairobi. They came with me to pursue opportunities for investments and partnerships with Kenyan companies,” he said.
This needs to be reciprocated by Kenya to leverage on the opportunities in Singapore as the balance of trade does not look good at all. Singapore exports to Kenya were $152.68 million during 2021, according to the United Nations COMTRADE database on international trade, while imports were only $9.8 million.
Thailand
Kenya is Thailand's largest trading partner in East Africa, while Bangkok is Nairobi's key partner in in Southeast Asia.
"Thailand regards Kenya as its gateway to East Africa. We can serve as a gateway for Kenya to the Association of Southeast Asian Nations and beyond,” Ambassador Sasirit Tangulrat wrote in an opinion article in July 2022.
However, despite efforts to enhance trade, Thailand exports to Kenya were $204.44 million in 2021, according to the United Nations COMTRADE database on international trade, while Kenya exports were a mere $19.97 million. This is a challenge for the Trade ministry.
Ambassador Tangulrat in a previous interview with the Star said that despite there being a lot of potential in trade and investment, she felt there might be some gap between the two peoples. This should be a challenge to the Ministry of Foreign Affairs through its embassy to create awareness about Thailand and opportunities.
Noting that Thailand has the advantage of location in the heart of Southeast Asia, the envoy urged Kenyan investors to invest there because it is well-linked with other neighbouring countries
"In the Eastern Economic Corridor covering three provinces in the eastern part of Thailand, we focus on 12 main industries, among them food for the future, automobile, wellness and public health, AI and robotics. There are many areas Kenyans can invest in Thailand,” she said.
Malaysia
Despite Kenya maintaining a resident mission in Kuala Lumpur since in 1996, and Malaysia reciprocating in 2005, bilateral trade has been low. Kenya imported $855.1 million worth of goods from Malaysia in 2021, while it only exported $16.77 million.
High Commissioner in Kuala Lumpur Ndegwa Muhoro acknowledges this, saying while Kenya is a key market for Malaysia in the sub-Sharan Africa, ranking as Malaysia’s fourth largest trading partner in Africa in 2021, Kenya’s exports to Malaysia are still low.
He was, however, confident this will change.
Speaking to the Sun Daily in January, Muhoro said the bilateral ties are poised to deepen and widen as both countries are pursuing reinvigorated relations. He highlighted opportunities for both countries in agro-processing value addition, manufacturing and tourism.
Stephen Ndegwa, executive director South-South Dialogues, says Southeast Asian countries have excelled in the textile and ICT industries, which Kenya can borrow ideas from since the country has good soils for growing cotton and educated manpower that can produce digital products.
"Kenya can appeal to Southeast Asian countries with its agricultural raw materials. But the country must feel challenged by its partners and add value to farm produce for export in order to create jobs and fetch more revenue,” Ndegwa adds.
Each of these countries see Kenya as strategic bilateral trade partner and a gateway to the East African region. Their ambassadors have invited our investors.
Likewise, Kenya must look in this direction and work towards a better balance of trade. This means Trade CS Kuria and his Foreign Affairs counterpart Alfred Mutua have a lot more to do.
One way of doing this is implementing signed bilateral agreements. Often, diplomats complain of unimplemented MoUs gathering dust at MFA, perhaps reason President Ruto during PM Loong's visit said they agreed the Bilateral Investment Treaty signed on June 12, 2018 be immediately made operational.
They also directed respective ministers to conclude negotiations on the Agreement on Avoidance of double taxation "within the shortest time possible", as this will spark and grow trade and investment.
If these markets are well exploited, Kenya's agricultural, mining and textile industries, among other sectors, will expand, further creating jobs and other opportunities.