Exempt from U.S. sanctions, Chabahar Port in southeast Iran can serve as a gateway for Indonesia to access Central Asian and Russian markets, according to a recent report by the Iran Chamber of Commerce's Research Center.
The report titled "Indonesia's Economic Diplomacy," tries to shed light on Indonesia's economic goals, global trade position, and its trade ties with Iran. It not only provides insights into Indonesia's flourishing $1.1 trillion economy, ranking 16th globally, but also addresses the challenges it faces, such as income inequality, infrastructure gaps, and legal complexities.
Key findings from the report include:
1.Indonesia's Economic Strengths: As the world's largest archipelago, Indonesia boasts a diverse and robust economy, characterized by sustainable growth, a sizable consumer market, and a competitive workforce. Despite these strengths, challenges such as income inequality and infrastructure gaps persist.
2.Economic Diplomacy as a Strategic Tool: Indonesia actively employs economic diplomacy to tackle challenges and achieve its economic objectives. Strategies include membership in international organizations, signing free trade agreements, infrastructure development, investment incentives, export diversification, and support for small and medium-sized enterprises.
3.Free Trade Agreements and Global Influence: Indonesia's economic diplomacy relies on an intricate network of free trade agreements, positioning the country strategically in global trade. Noteworthy agreements include those with ASEAN, China, Japan, South Korea, Australia, India, and the European Union, fostering market access, technology transfer, and foreign investment.
4.Foreign Investment Magnet: Through a combination of active economic diplomacy and diverse strategies, Indonesia has emerged as an attractive destination for foreign investment. A youthful population, strong domestic demand, political stability, abundant natural resources, and effective macroeconomic policies contribute to its appeal among international investors.
5.Challenges in Iran-Indonesia Economic Relations: Despite Indonesia's economic potential, its trade relations with Iran are underwhelming, with Iran's share in Indonesia's foreign trade remaining below one percent. The presence of sanctions hampers Iran's ability to compete with regional rivals such as the UAE and Saudi Arabia, thereby restricting its access to the Indonesian market.
6.Opportunity in Chabahar Port: To bolster trade ties, a potential avenue for collaboration is Chabahar Port. Exempt from U.S. sanctions, this port can serve as a gateway for Indonesia to access Central Asian and Russian markets. Considering joint investment in Chabahar Port could be a strategic move for both countries, providing a sanctioned-free channel for economic collaboration and facilitating the rapid development of trade relations.
In conclusion, exploring joint investment opportunities in Chabahar Port presents a promising avenue for Iran and Indonesia to strengthen their economic ties, overcoming the challenges posed by existing sanctions and fostering mutually beneficial cooperation in the global trade landscape.
Read the full report (in Persian) here.