Norway urges Indonesia acceleration of free trade negotiations

Linda Yulisman in Jakarta/The Jakarta Post
Asia News Network

Jakarta (The Jakarta Post/ANN) - Norway expects the negotiations on the proposed free trade agreement between Indonesia and Norway and its three Scandinavian neighbors under the European Free Trade Association (EFTA) to be accelerated to enable it to further boost bilateral trade with Southeast Asia's largest economy.

Norwegian Deputy Trade and Industry Minister Kristin Maurstad said in Jakarta on Friday that he wanted the partnership agreement to be concluded soon so that Norway could benefit from the myriad opportunities in Indonesia.

"Business ties between our two countries are growing and there is much potential for increasing trade. This partnership will encourage us and promote further growth in trade on both sides," Maurstad told The Jakarta Post on the sidelines of the Norway Asia Business Summit in Jakarta.

The negotiated comprehensive economic partnership agreement (CEPA) would serve as a basic step toward lowering trade barriers, particularly in terms of import duties, that would help generate expansion in trade as well as facilitate investment.

Indonesia and EFTA are scheduled to conduct the seventh round of negotiations on the CEPA next month.

Bilateral trade totaled US$321.89 million last year, up 4 per cent from a year earlier, with Indonesia delivering $87.05 million worth of goods and commodities and buying $234.84 million, according to figures from the Trade Ministry. Indonesia mainly exports footwear, apparel, furniture, wood products and commodities like coffee, while it imports machinery and fishery products.

Mutual trade has grown markedly by 92 per cent over the past decade, according to Norwegian statistics. At present, around 20 Norwegian firms invest in Indonesia, primarily in energy and maritime sectors.

Enhancing two-way trade and overall economic ties between both economies was important as Norway was currently putting more emphasis on Asia, the new centre of global economic gravity, which served as its second-largest regional destination for its shipments after Europe, according to Maurstad.

Separately, Knut Fossum, the director of Norwegian energy company, KF Gruppen AS, said his firm would be spending around $240 million to set up a hydropower plant in Enrekang regency, South Sulawesi. Construction is due to begin in April next year, with completion scheduled for 2017. The power plant will have an installed capacity of 110 megawatts (MW) and will produce 530 gigawatt hours (GWh) of electricity per year once operations begin.

"We will soon complete a power-purchase agreement with [state-owned electricity firm] PT PLN worth between $40 million and $45 million per year," he told the Post on the sidelines of the business summit.

To get the project started, which will be carried out as part of a joint venture with its local partner, PT Internusa Alam Karya, the firm aims to derive 30 per cent of the total funding from its equity, while obtaining the remainder from loans from sources that may include the Asian Development Bank (ADB), the World Bank's International Finance Corporation or Norwegian financial institutions.