PREPARATIONS are being laid for negotiating a preferential trade agreement between the East African Community partner states and Indonesia.

Indonesian ambassador Tri Yogo Jatmiko, the resident plenipotentiary also accredited to the EAC partner states said here yesterday that EAC countries were exporting goods valued at $117m to Indonesia while importing consignments nearing $600m from the Far East country.

With the broadened EAC after admitting the DRC, South Sudan and Somalia, the EAC is capable of seeking an improved preferential trade agreement with Indonesia as it offers a tangible market, also redresses what experts see as an unfavourable balance of trade.

The envoy paid a courtesy visit to the East African Business Council here yesterday, conferring with Adrian Njau, the EABC acting executive director, where the envoy noted that 60 percent of Indonesia’s trade is conducted within the Association of Southeast Asian Nations (ASEAN), while Africa accounts for only 4 percent of its external transactions.

 Indonesia is the 15th largest economy globally, the largest in ASEAN and a member of the G20, also having a large market of 280m people with above-average earnings among middle-income countries.

Improving direct connectivity to East Africa will strengthen trade ties and engagements between businesses, he said, underlining that Indonesia is committed to diversifying its sources of imports and advancing its economy by enhancing manufacturing output and expanding global trade ties.

EAC's top exports to Indonesia in 2023 were cocoa beans ($90.9m), processed tobacco ($15m) along with lamb meant and hides ($3.4m), while the main imports from Indonesia include palm oil $285.54m), paper ($59.6m), semi-finished iron products ($43m), bulldozers and graders ($25.7m) and machinery ($10m), he explained.

 “There is a growing interest in trade and investment between EAC and Indonesia. An economic agreement would provide preferential tariffs and open the Indonesian market to EAC products such as wheat, soybeans, rice, vegetables, cocoa beans, and food preparations,” the director noted.

 In 2023, Indonesia’s total imports of wheat amounted to $3.8bn, soybeans $1.5bn, rice 1.7bn, vegetables at $743m, cocoa beans at $732m and prepared foods at $701m.

Indonesian investors have lately signed an agreement to build a fertilizer factory that will use available natural gas as a key raw material.

 The EABC is committed to partnering with business associations in Indonesia to promote trade and investment ties through joint exhibitions, conferences and business missions, he said.

Other areas of discussion included agriculture and agro-processing, education and capacity building, tourism and cultural exchange, technology transfer as well as business and advocacy support, he added.