Indonesia aims to sign US$3.5 billion in deals during Africa forum

INDONESIA will seek to sign US$3.5 billion of trade and investment agreements with Africa as global trade battles spur a hunt for new markets outside Asia, according to a senior diplomat.

The deals will be announced at the ongoing Indonesia-Africa Forum, which will be held until Tuesday (Sep 3) in Bali, Vice Foreign Affairs Minister Pahala Mansury said last week. The targeted haul is much bigger than the roughly US$600 million in deals signed in 2018, when the inaugural meeting was held, he said.

Among the biggest is a project in the gas sector, with an Indonesian company looking to produce fertiliser and ammonia in Africa, Mansury said. There will also be agreements in the health and agricultural sectors as Indonesia looks to export more vaccines, pharmaceutical and food products to the continent, he said.

Indonesia has long been looking to diversify trade beyond its major partners such as China, the US and Japan. That search is taking on greater urgency as a struggling Chinese economy, weak commodity prices and increasing protectionism pose headwinds for the country’s export sector.

Kenya, Nigeria, South Africa and Egypt, in particular, have fast-growing populations that could be promising export markets for South-east Asia’s largest economy, according to Mansury, adding that the foreign affairs ministry is pushing for better market access for Indonesian commodities. Africa accounted for just US$6.9 billion of Indonesia’s exports in 2023, less than 3 per cent of total shipments.

Resource-rich Africa will also be a key player in Indonesia’s ambitions to use its vast reserves of nickel to become a production hub for batteries.

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“Indonesia will need to work with Africa because not all of the critical minerals that are required to produce battery materials are available in Indonesia” Mansury said, citing the examples of lithium, cobalt and graphite. Talks are still exploratory, pending geophysical survey results, he added.

As the likes of the US and the European Union wield tariffs on China-made electric vehicles, scuppering carmakers’ production plans, Indonesia and Africa can work together to create a stronger global supply chain for batteries, according to the diplomat.

“Amid geopolitical tensions between economic superpowers, this is a very good opportunity for Global South countries to work together rather than treat each other as a competitor,” he said. BLOOMBERG