INDONESIA FREE TRADE AGREEMENT WITH NZ WILL BOLSTER TRADE OPPORTUNITIES FOR KIWI EXPORTERS, SAYS HSBCPublish By Ryan Berry Updated 09/01/2012 1:27 pm in Business / no comments
Tomorrow marks the day where Indonesia becomes the final country to join the ASEAN-Australia-New Zealand Free Trade Agreement (FTA), highlighting a significant opportunity for New Zealand exporters and importers to do business with this emerging economy.
With Indonesia on our back door step, the country is far closer to New Zealand than some of our larger trading partners including China, the USA, Japan and the UK. When this is coupled with the fact that Indonesia’s GDP growth is forecast to be 6.1% in 2012 and 6.5% in 2013* this is an opportunity that Kiwi businesses, particularly those in the food and agriculture sector, cannot ignore.
Cath Henry, Head of Global Payments and Cash Management, at HSBC New Zealand says: “Indonesia is set to be one of New Zealand’s top 10 fastest growing trade corridors**, with trade over the next five years set to grow at an annualised rate in excess of 7% and by 2025 grow at an annualised rate over 5% – this represents a huge opportunity. The fact that Indonesia is set to join the ASEAN-Australia-New Zealand Free Trade Agreement suggests that trade growth could increase even further.”
New Zealand’s top exports to Indonesia include milk powder, cream, frozen meat, malt extracts, butter, cheese, fish and interestingly chemical wood pulp and ferrous waste and scrap.
“With economists predicting strong GDP growth for the year, Indonesia looks set to be one of the shining stars of South East Asia and lead growth for the region. Looking even further ahead, growth in Indonesia should hold up well, sustained by domestic demand, which is being fuelled by factors, such as demographics, rising incomes and urbanisation – which points to nothing but opportunities for our food and agricultural producers” continues Cath Henry.
“However, like many of the emerging markets it’s essential that New Zealand businesses do their homework before they consider trading with Indonesia. For example, the Indonesia Rupiah (IDR) is still a restricted currency which can’t be remitted outside of the country so payments into and out of the country can require careful consideration. In addition, the documentation required to support payments can be viewed as being challenging, but the rewards of doing business with this emerging market far outweigh any difficulties,” concludes Cath Henry.