Indonesia Chile Relations

The two day visit of Chile President Michelle Bachelet to Indonesia on 12th and 13th May 2017 has further enhanced the bilateral relations between Chile and Indonesia. The bilateral relations between the two countries were established in 1965, and since then have historically developed in accordance with the principles of the Non-Aligned Movement. Till 1989, bilateral relations between the two countries were mainly political. However, since the post-Cold War period, and in particular since the last decade, the level of economic cooperation has greatly enhanced between the two nations. Currently, Chile is Indonesia’s third-largest trade partner in South America. In 2016, trade between Chile and Indonesia had reached US$227 million, with Indonesia enjoying a surplus of $60.5 million.

According to policy analysts, Indonesia and Chile on account of their well-established networks of economic relations in their respective regions have huge potential to benefit from economic cooperation. Indonesia has agreements with ASEAN, Japan, China, Korea, India, Australia and New Zealand economies and is currently commencing negotiation with major trading partner, bilaterally and regionally. On the other hand, Chile has commercial and economic agreements with all Latin American countries and with the USA and Canada. Indonesia thus has the potential to serve as a gateway for Chile to the South East and East Asia in the same vein as Chile could be the gateway for Indonesia to Latin America.

Increasing cooperation particularly in the areas of economy, trade, maritime, socio-cultural, and fisheries were the main topics discussed during the recent bilateral talks between Bachelet and the Indonesian President Joko Widodo. The most significant development in the economic relations between the two nations was the joint-ministerial statement on negotiations for a Comprehensive Economic Partnership Agreement (CEPA). Currently, the two countries are in the process of negotiating CEPA, which is expected to increase trade and investment between the two countries. “We hope that the CEPA negotiations, particularly related to trade and goods, would be concluded this year,” President Joko Widodo stated.

Indonesia and Chile began negotiations on a free trade treaty in 2014 in the Chilean capital of Santiago. Over the last two months, the two countries had resumed the CEPA negotiations that had got delayed for over two years. Imam Pambagyo, Director-General of Trade Ministry’s International Trade Negotiations, stated in March that the pact was crucial, as Chile has dozens of free trade agreements with more than 60 countries, mostly located in the Latin American region. Chilean President Bachelet too believes that CEPA agreement is expected to not only benefit the trade sector but also other economic areas. Indonesia’s main exports to Chile include footwear, apparel and accessories, electrical machinery, rubber and paper. Meanwhile, Chile’s main exports to Indonesia include wood, charcoal, glass and glassware, aluminium and foodstuff like citrus fruits and fruit peel.

Indonesian President Widodo lauded the Chilean President for bringing a business delegation of several companies that were part of the Federation of Chilean Industries and the Federation of Chile’s Fruit Producers. During Bachelet’s visit, visa extension treaty for diplomatic passport holder was signed and other issues such as investment in the energy sector and collaboration in protecting the environment and oceans were also discussed. “Indonesia and Chile could maintain more robust relations in the future by enhancing cooperation in the power sector,” the Chilean President remarked and mentioned that Indonesia had huge potential in the form of solar and geothermal energy reserves.

Indonesian-Chile relations also received a thrust on the diplomatic front as the Chilean government expressed support that it would support to Indonesia’s bid for the UN Security Council seat for the 2019-2020 period. “I express my gratitude to Chile for its support to Indonesia’s nomination for a membership of the UN Security Council for the 2019-2020 period,” President Joko Widodo remarked during a joint press conference with Bachelet. It may be mentioned here that Indonesia had offered similar support to Chile during the 2014-2015 period.
Chile and Indonesia share points of view in various international fora, for example in the area of collective security, human security and global and regional peacebuilding. Both nations agree on combating poverty through sustainable development programs, focused on people and through the liberation of world trade. There is also a common interest in the promotion of human rights, the reform and strengthening of the UN system, the maintenance and promotion of peace.

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