Indonesia / Business Relations

Indonesia Business Guide

Turkey-Indonesia Foreign Trade

YearExports US$Imports US$VolumeBalance
2016258.839.3741.454.130.7551.692.970.129-1.175.291.381
2017245.225.9261.495.465.8211.740.691.747-1.250.239.895
2018286.302.7541.361.378.8341.647.681.588-1.075.076.080
2019289.372.2811.352.296.3091.641.668.674-1.062.924.112
2020 (January-March)81.980.354424.901.265506.971.619-343.010.911

Turkey’s Major Export Items To Indonesia

GTİİP / HS CODEPRODUCT
7207SEMI-FINISHED PRODUCTS OF IRON OR NON-ALLOY STEEL
2401UNMANUFACTURED TOBACCO; TOBACCO REFUSE
2840BORATES; PEROXOBORATES (PERBORATES)
5702CARPETS AND OTHER TEXTILE FLOOR COVERINGS
2836CARBONATES; PEROXOCARBONATES; COMMERCIAL AMMONIUM CARBONATE CONTAINING AMMONIUM CARBONATE
8544INSULATED WIRE CABLE AND OTHER INSULATED ELECTRIC CONDUCTORS, OPTICAL FIBER CABLES, MADE UP OF INDIVIDUALLY SHEATHED FIBERS
2610CHROMIUM ORES AND CONCENTRATES
8504ELECTRICAL TRANSFORMERS, STATIC CONVERTERS (FOR EXAMPLE, RECTIFIERS) AND INDUCTORS
6214SHAWLS, SCARVES, MUFFLERS, MANTILLAS, VEILS AND THE LIKE
2515MARBLE, TRAVERTINE, ECAUSSINE AND OTHER CALCAREOUS MONUMENTAL OR BUILDING STONE
0805CITRUS FRUIT, FRESH/DRIED
5209WOVEN FABRICS OF COTTON, CONTAINING 85% OR MORE BY WEIGHT OF COTTON, WEIGHING MORE THAN 200 GR/M²
5402SYNTHETIC FILAMENT YARN (OTHER THAN SEWING THREAD), NOT PUT UP FOR RETAIL SALE
8451WASHING, CLEANING, DRYING, IRONING, FINISHING, COATING TEXTILE YARNS, FABRICS OR MADE UP TEXTILE ARTICLES
8708KARAYOLU TAŞITLARI İÇİN AKSAM, PARÇA VE AKSESUARLAR / PARTS AND ACCESSORIES OF THE MOTOR VEHICLES
1101WHEAT OR MESLIN FLOUR
6802WORKED MONUMENTAL OR BUILDING STONE (EXCEPT SLATE) AND ARTICLES THEREOF, MOSAIC CUBES AND THE LIKE
9018INSTRUMENTS AND APPLIANCES USED IN MEDICAL, SURGICAL, DENTAL OR VETERINARY SCIENCES
8450WASHING MACHINES, HOUSEHOLD- OR LAUNDRY-TYPE INCLUDING MACHINES WHICH BOTH WASH AND DRY; PARTS THEREOF
8705SPECIAL PURPOSE MOTOR VEHICLES, (FOR EXAMPLE, WRECKERS, MOBILE CRANES, FIRE FIGHTING VEHICLES, CONCRETE MIXERS, ROAD SWEEPERS, SPRAYING VEHICLES, MOBILE WORKSHOPS, MOBILE RADIOLOGICAL UNITS)

Turkey’s Major Import Items From Indonesia

GTİİP / HS CODEÜRÜNLER / PRODUCTS
4001NATURAL RUBBER, BALATA, GUTTA-PERCHA, GUAYULE, CHICLE AND SIMILAR NATURAL GUMS
5509YARN (OTHER THAN SEWING THREAD) OF SYNTHETIC STAPLE FIBERS, NOT PUT UP FOR RETAIL SALE
5402SYNTHETIC FILAMENT YARN (OTHER THAN SEWING THREAD), NOT PUT UP FOR RETAIL SALE
5504ARTIFICIAL STAPLE FIBERS, NOT CARDED, COMBED OR OTHERWISE PROCESSED FOR SPINNING
5407WOVEN FABRICS OF SYNTHETIC FILAMENT YARN
5510YARN (OTHER THAN SEWING THREAD) OF ARTIFICIAL STAPLE FIBRES
1511PALM OIL AND ITS FRACTIONS, WHETHER OR NOT REFINED, BUT NOT CHEMICALLY MODIFIED
5516WOVEN FABRICS OF ARTIFICIAL STAPLE FIBRES
4802UNCOATED PAPER AND PAPERBOARD, NON PERFORATED PUNCH CARD AND PUNCH TAPE PAPER OF ANY SIZE
3823INDUSTRIAL MONOCARBOXYLIC FATTY ACIDS; ACID OILS FROM REFINING; INDUSTRIAL FATTY ALCOHOLS
2701COAL; BRIQUETTES, OVOIDS AND SIMILAR SOLID FUELS MANUFACTURED FROM COAL
6404FOOTWEAR, WITH OUTER SOLES OF RUBBER, PLASTICS, LEATHER OR COMPOSITION LEATHER AND UPPERS OF TEXTILE MATERIALS
6403FOOTWEAR WITH OUTER SOLES OF RUBBER, PLASTICS, LEATHER OR COMPOSITION LEATHER AND UPPERS OF LEATHER
8001UNWROUGHT TIN
8708PARTS AND ACCESSORIES OF THE MOTOR VEHICLES
1513COCONUT (COPRA), PALM KERNEL OR BABASSU OIL AND FRACTIONS THEREOF, WHETHER OR NOT REFINED, BUT NOT CHEMICALLY MODIFIED
1517MARGARINE
4703CHEMICAL WOOD PULP, SODA OR SULPHATE
1516ANIMAL OR VEGETABLE FATS AND OILS AND THEIR FRACTIONS
3204SYNTHETIC ORGANIC COLORING MATTER, SYNTHETIC ORGANIC PRODUCTS USED AS FLUORESCENT BRIGHTENING AGENTS OR AS LUMINOPHORES
Agreements and Protocols that Establish the Infrastructure of Trade Between Two Countries
Title of the AgreementSignature Date
Trade Agreement14/09/1959
Agreement on Economic and Technical Cooperation18/12/1982
 Agreement on Double Taxation Avoidance25/02/1997
8th JEC Protocol11-12/10/2017

 

After the EU-ASEAN Free Trade Agreement (STA) negotiations started on 4 May 2007, an attempt was made on June 12, 2007 to initiate STA negotiations between our country and ASEAN. On July 28, 2008, meetings were held with ASEAN Secretary General and Indonesian authorities in an exploratory manner, and after these conversations, a non-paper was sent to the Economy and Foreign Affairs Ministries of ASEAN Countries on August 6, 2008 and subsequently a letter to the economy ministers of ASEAN countries for the start of the STA negotiations and their support was requested.

In the reply letter sent by Indonesia on September 16, 2008, it was stated that Turkey should be a Dialogue Partner with ASEAN in order to start Turkey-ASEAN STA negotiations. In this framework, the efforts to establish the mentioned Dialogue Partnership are carried out by our Ministry of Foreign Affairs.

On the other hand, during the “ASEAN-EU Finance Ministers’ Meeting” between ASEAN and the EU held on 4-5 May 2009 in Siem Reap, it was decided to freeze STA negotiations between the two organizations. After this, our country made an attempt at the end of July 2009 to start bilateral STA negotiations with some of the ASEAN countries, namely Singapore, Malaysia, Indonesia, Thailand, Vietnam, Philippines and Brunei, which are prominent in terms of economic size, without waiting for the EU to take a similar decision.

The first negotiation, with regards to a Comprehensive Economic Partnership Agreement (CEPA) to be signed between Turkey and Indonesia, was held in Jakarta on 8-9 January 2018, and the fourth of these negotiations was held in Ankara on 30-31 January 2019. Negotiation process is still ongoing.

8th Period meeting for Turkey-Indonesia Joint Commission for Economic and Technical Cooperation was held in Jakarta on 11-12 October 2017.

TURKEY-INDONESIA INVESTMENT RELATIONS

According to the official sources of Indonesia, the “total investment amount” made by Turkish companies to Indonesia reached 115 million dollars by the end of 2019.

TRADE PROBLEMS BETWEEN TWO COUNTRIES

The import of meat and meat products and milk and milk products (excluding milk powder) originating from our country to Indonesia cannot be made on account of the foot and mouth disease in our country.

Within the framework of the new regulations published by the Ministry of Agriculture of Indonesia on February 17, 2015 and entered into force one year later, import of agricultural products is possible provided that they are among the products that are allowed to be imported from Turkey by the Ministry of Agriculture of Indonesia and only if they are certified subject to the conformity assessment of approved Turkish laboratories and imported in this manner. The said application also brings along requirements such as the provision of an analysis certificate within the framework of the preliminary notification mechanism for the import of related agricultural products.

As of today, approval has been obtained for 15 Turkish laboratories to be used in agricultural product analysis. Currently, there are 20 agricultural products that are allowed by the Ministry of Agriculture of Indonesia to be imported from Turkey provided that they meet the implementation requirements of the relevant legislation.

In the import of food products, the ML (Overseas Mark) practice, which is obtained from the Ministry of Health by the importer before the import, continues and this practice prolongs the import procedure in terms of time.

Another problem faced by our exporters is the minimum unit price practice for the calculation of customs duties in imports. Uncertainties in this practice are an obstacle for our exports. The amount of customs duties on imports is increased with this practice. In our export of food products to Indonesia, Halal Certificate is requested by the importers to show that the goods are prepared and processed in line with Islamic principles. Even though Halal Certificate is not a mandatory document required during import, it is an essential document in the domestic marketing of the product. The document obtained in Indonesia is given by the Indonesian Council of Ulama Assessment Institute. In order to obtain the certificate, it is necessary that the council experts supervise the production facilities following the manufacturer’s application. This process brings additional burden to our exporters.

In case of a commercial dispute, it takes a long time to finalize the legal proceedings regarding the receivables and to settle disputes. As a result, the form of payment is important for our companies. Our companies should take this into consideration. Under the current regulations in Indonesia, if our companies are defrauded, they must personally apply to the judicial authorities for legal proceedings. In the absence of a personal application, proceedings cannot be carried out. Police research takes a very long time and the results are limited. Mutual contact is an important factor in trade relations with this country.

There is an anti-dumping duty on imports for a total of 10 product groups to be imported from Indonesia, such as air conditioning, polyester fiber, laminated parquet, iron and steel pipe connections, polyester texturized yarn, synthetic and artificial staple fibers, hinges and fixed hangers, motorcycle and bicycle inner and outer tires and glass covers. The dominance of intra-regional trade in the Far East, freight prices, the inadequacy of information of our exporters about the market and the shortterm perspective are other obstacles faced by our exports.

STRENGTHS IN BILATERAL TRADE

  • Our export to Indonesia is gradually increasing.
  • Recent top-tier visits and positive political relations between the two countries.

WEAKNESSES IN BILATERAL TRADE 

  • Geographic distance between the two countries.
  • Indonesia’s close trade relations with ASEAN, China, Japan and South Korea and the trade agreements with these countries.
  • Cultural differences between our country and Indonesia.
  • The fact that our country and the products we produce are not well known in the country.

OPPORTUNITIES

  • Continuous growth of the Indonesian economy.
  • Muslim population in the country.
  • STA negotiations between our country and Indonesia, which are on the agenda.
  • The abundance of people from Europe and America living in the country.
  • Customs tax rate is 5% in most agricultural and food products.
  • Tendency towards new tastes with the increase in per capita income
  • Increased demand for retail food products with more women participating in business.

THREATS

  • With the effect of Free Trade Agreements of companies from China and other Asian countries, especially ASEAN countries, the positive contribution of Asian countries such as China, S. Korea, Japan, India, Malaysia in the country in the field of investment and trade in favor of these countries.
  • Insufficiency of Turkish citizens living in Indonesia, the low awareness of Turkish companies, products and brands.
  • The importance of face-to-face contact in the Indonesian business culture, however, its geographic distance from our country
  • The fact that Turkish business people do not pay enough attention to Indonesia in general.
  • Although there are efforts to improve this situation by the authorities, the intensity of bureaucratic procedures and the difficulty of import transactions.
  • The fact that Indonesia is not fond of imports, and its understanding and approach trying to maintain the current situation and nontariff trade barriers.

AGREEMENTS

  • 1993: 18 Şubat 1993 / February 18, 1993 – Air Transportation Agreement (HUA)
  • 1997: 25 Şubat 1997 / February 25, 1997 – Agreement on Double Taxation Avoidance
  • 1997: 16 Mayıs 1997 / May 16, 1997 – Memorandum of Understanding (MOU)
  • 2010: Free Trade Agreement – In 2010, a joint work group was created on this subject. Various negotiations and communications were carried out. Negotiations are ongoing.
  • 2017: 7 Temmuz 2017 / July 7, 2017 – Letter of Intent Agreement Between Ministries of Health
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