The context of APEC 2024, which Peru has been hosting throughout the year, has facilitated progress on free trade agreements with Hong Kong and the optimization of an existing agreement with China. It has also advanced trade negotiations with Indonesia. Peru has already conducted three negotiation rounds with Indonesia and is preparing for a fourth round, scheduled for October 28 in Jakarta, according to the Ministry of Foreign Trade and Tourism.
In terms of Peru’s global trade, Indonesia’s role remains limited. Claudia Sícoli, director of the Economics and International Business program at Universidad Peruana de Ciencias Aplicadas (UPC), notes that Indonesia accounts for only 0.5% of Peru’s foreign trade. Meanwhile, Edgar Vásquez, director of the Center for Global Economics and Business Research at the Association of Exporters (CIEN-ÁDEX), says that Indonesia ranks as the 30th trading partner in Peru’s trade relations.
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Trade between Peru and Indonesia is currently in deficit for Peru, with 88% of trade volume consisting of imports from the Southeast Asian country and only 12% representing Peruvian exports. However, Vásquez explains that this trade deficit is neither good nor bad in itself, as it’s unrealistic to maintain a trade surplus with all international markets.
One of Peru’s main imports from Indonesia is transportation vehicles, experts point out. In this category, Indonesia ranks as Peru’s fourth-largest supplier, following China, India, and Brazil. Footwear is another significant import.
Trade Potential
Peruvian exports to Indonesia, on the other hand, are primarily in the agro-export sector, with cocoa and its derivatives being the main products. Indonesia is currently the third-largest market for Peruvian cocoa, following the European Union and Malaysia.
Vásquez and Sícoli both highlight that from January to August this year, exports to Indonesia have grown by more than 300% compared to the same period in 2023, narrowing the trade gap. For example, the value of cocoa bean exports surged by 245.1% as of June, according to CIEN-ÁDEX.
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The Comprehensive Economic Partnership Agreement being negotiated with Indonesia represents a significant opportunity to eliminate tariffs. Vásquez points out that Indonesia’s tariffs are notably high, often reaching double digits in various cases.
Furthermore, Sícoli believes that this agreement will be a key incentive to significantly increase trade flow between Peru and Indonesia.
