Hong Kong seeks to tap Indonesian trade and services markets

As part of the plan, Hong Kong is set to carry out a mega-promotion project in Indonesia on September 17, presenting more than a hundred firms in the areas of e-commerce, design, trade arbitration and finance.

The event, which will be Hong Kong’s first country-branding exercise in the world, is motivated by the potential purchasing power of the rapidly increasing middle-class in Indonesia, Southeast Asia’s largest economy.

Hong Kong firms aim to assist in the promotion of Indonesia’s products through packaging, something that has been a key concern for local firms attending its fairs, according to Hoh Jee Eng, director of Malaysia’s office of the Hong Kong Trade Development Council (HKTDC).

“Indonesia has a lot of products that are very tasty, but not many people know about them. We need to promote them outside Indonesia,” she said, adding that rising demand for halal food in China in line with an expanding Muslim population would be an opportunity that could be tapped together.

Hoh also pointed out intellectual property protection and web designs as other areas of cooperation between business people from both countries. “As Indonesian firms go out, there will be more trade disputes. We want to make them more aware about the importance of intellectual property protection to avert this,” she said.

The delegation of Hong Kong businesspeople will be led directly by the chief executive of the Chinese special administrative region, CY Leung, who is scheduled to make a courtesy call on president Joko Widodo, and be accompanied by several of his economic ministers.

Indonesia’s exports to Hong Kong dipped by 1.3 per cent to US$2.5 billion last year, mainly comprising coal at 32.8 per cent, jewellery (11 per cent) and edible products and preparations, according to statistics from the HKTDC.

Imports, on the other hand, rose by 4.7 per cent to $2.6 billion, primarily made up by telecommunication equipment and parts at 25.8 per cent, computers (11.3 per cent) and knitted or crocheted fabrics (6.2 per cent).

Along with its partners in Asean, Indonesia is currently negotiating an FTA with Hong Kong with talks, which began last July, already entering their third round. The city government expects the agreement to be in place by 2016. 

“In Hong Kong, Asean is a fast-growing market. We feel Asean should be closer to us,” Hoh said, pointing out the significant role that Indonesia played in the regional bloc. Separately, the trade ministry’s director general for international trade cooperation, Bachrul Chairi, said that with the agreement, Indonesia expected more direct investment coming from Hong Kong to generate a wide range of projects and boost economic growth.

Investment will be a key target because Indonesia cannot expect any preferential treatment in terms of goods as Hong Kong applies zero duties on imports.

“We need more investment to finance our infrastructure and services to support our maritime sectors. The entry of foreign services will tighten competition and lower costs,” Bachrul said.

At present Indonesia levies duties of between 5 per cent and 10 per cent on goods from Hong Kong.