Forging Deeper Economic Ties for MSMEs and Trade
Indonesia and South Africa have commenced exploration of new avenues to deepen their bilateral cooperation in trade and the vital development of micro, small, and medium enterprises (MSMEs).
This commitment to strengthening collaboration was articulated by Indonesian Trade Minister Budi Santoso during his meeting with South African Deputy Minister of Trade, Industry, and Competition Zuko Godlimpi in Gqeberha, South Africa, on Friday, October 10.
The minister underscored the importance of the meeting, viewing it as a “valuable momentum” for both nations to solidify their economic relations through a strategic partnership framed within the principles of South-South cooperation.
The high-level officials formalized an agreement to advance talks focused on new cooperation specifically covering bilateral trade and the critical development of MSMEs, recognizing these sectors as key drivers for mutual growth.
Santoso highlighted South Africa’s status as a strategically important trading partner for Indonesia on the African continent, emphasizing the substantial potential for expanding bilateral trade.
This expansion would specifically target increasing the market reach of several key Indonesian commodities, including palm oil, rubber, and motorized vehicles, in the promising South African market.
The Indonesian minister enthusiastically welcomed South Africa’s reciprocal commitment to deepening its economic ties, stating that this synergy is expected to “open up vast opportunities for business actors from both countries,” thereby fostering greater private-sector engagement and facilitating the growth of small businesses, including MSMEs, within the South-South framework.
Revitalizing the Joint Trade Committee for Collaboration
A core component of the discussions between Indonesia and South Africa involved the essential step of resuming regular meetings of the Indonesia–South Africa Joint Trade Committee (JTC).
Established in 2005, the JTC is designed to function as a formal, institutionalized platform for both nations to regularly exchange information on potential trade and investment opportunities, addressing any potential barriers and strategically planning future collaboration.
In an effort to restart this vital mechanism, Minister Santoso proposed that the fourth JTC meeting be convened in Indonesia.
The primary agenda for this forthcoming high-level forum would be to thoroughly discuss and formulate strategic steps aimed at decisively strengthening cooperation across trade, investment, and industry.
This proposed meeting would serve as a crucial follow-up to the previous JTC forum, which was held in Pretoria, South Africa, in 2017.
The significant gap since the last meeting underscores the urgency of revitalizing the committee to keep pace with the evolving global economic landscape and to fully realize the untapped potential of their bilateral relationship.
The Indonesian minister expressed a strong hope that the 4th JTC meeting would “soon take place so we can explore opportunities and challenges in bilateral trade and further bolster our economic cooperation,” reiterating the need for timely, high-level engagement.
South Africa, for its part, affirmed its interest in advancing the cooperation and expressed hope that Indonesia would quickly submit a formal proposal for establishing a clear cooperation framework, signaling their readiness to move beyond exploratory talks and into concrete planning, which is vital for providing a stable environment for MSMEs and larger businesses alike.
Solidifying Economic Figures and Future Growth
The current economic figures between the two countries demonstrate a solid foundation for the targeted expansion of trade and investment.
Between January and August 2023, the total value of bilateral trade between Indonesia and South Africa reached a substantial US$1.42 billion.
Indonesia contributed significantly to this figure, with its exports to South Africa totaling US$690.60 million during the same period, highlighting a competitive export capacity that the new cooperation framework aims to enhance further.
Looking at the previous full year, the two countries recorded a total trade volume of US$2.41 billion in 2022.
This figure represented a robust 7.2 per cent increase over the total trade volume recorded in the preceding year, underscoring a positive, upward trajectory in their economic engagement that the planned strategic cooperation is intended to accelerate.
This consistent growth provides a compelling economic incentive for both nations to formalize and deepen their ties.
By focusing on the development of MSMEs, the nations are targeting the segment of the economy responsible for the majority of employment and domestic innovation, ensuring that the benefits of expanded international trade are broadly distributed across their populations.
The commitment to revive the Joint Trade Committee and advance talks on a new cooperation framework indicates a clear, unified intent to move beyond incremental growth and into a phase of strategic, institutionally-supported expansion, ultimately solidifying South Africa’s position as Indonesia’s gateway to the African continent and vice-versa, enhancing global market access for their respective MSMEs.
