17 July 2020

Covid-19: Indonesia looks to expand countertrade options

by Jon Grevatt

The Indonesian government has said it is exploring opportunities with military suppliers to facilitate procurement through countertrade. The move to lean on such methods, it said, is being considered to help the country overcome economic constraints, which have been exacerbated by Covid-19.

The Indonesian Ministry of Trade said in a statement on 16 July that it is collaborating with the Ministry of Defence in talks with “several trading partner countries” about expanding the application of countertrade in defence purchases, transferring locally produced commodities to foreign military suppliers in exchange for defence equipment.

Indonesia supported its planned acquisition of Sukhoi Su-35 fighter aircraft (pictured) through a countertrade programme. Jakarta now wants to roll out the payment method on a wider scale to boost its economy. (Sukhoi)

The Ministry of Trade said that local commodities that could be positioned for defence countertrade deals included palm oil, rubber, machinery, coffee, cocoa, textile products, tea, footwear, fish, furniture, fruits, plastics, resins, paper, and spices. Indonesian Minister for Trade Agus Suparmanto said in the statement, “Applying countertrade, Indonesia's export commodities can support growth in the national economy.”

The Ministry of Trade went on to highlight some of the benefits of applying countertrade in defence purchases. “The [countertrade method helps Indonesia] overcome obstacles and export constraints and expands market areas and the marketing of new products,” it said.

“It also saves foreign exchange, accelerates the transfer of technology and knowledge, supports efforts to create an equal balance of trade and payment, and increases production and expands employment opportunities.” It said.

The Indonesian government has said it is exploring opportunities with military suppliers to facilita...

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