The Warsaw Voice » Other » Monthly - December 6, 2006
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Boosting Trade Relations
Poland is Indonesia's second largest market in Central and Eastern Europe, after Russia. The trade turnover between Indonesia and Poland has shown steady growth since 1990. That year, trade turnover between the two countries was valued at $63.7 million and in 2005 it reached $360 million (Indonesian exports to Poland $320 million, and Polish exports $41 million). The highest level of trade was registered in 2004 when it reached $398 million (Indonesian exports $338.5 million, Polish exports $ 59.5 million). Meanwhile, during the first eight months of 2006, Indonesian exports to Poland reached $221 million-up 14.5 percent from the same period the previous year. It is expected that for the whole of 2006, trade turnover will grow around 15 percent and amount to more than $400 million.

At the beginning of trade cooperation between the two countries, Indonesian exports were mostly traditional commodities like agricultural products and raw materials, such as natural rubber, coffee, tea and spices. In recent years, however, the commodity structure has undergone profound changes. PVC pipes, chemical compounds, telecommunication equipment, man-made yarns, garments, clothes, footwear, furniture and paper products have all been added.

In turn, Polish companies supply Indonesia with various kinds of machinery, civil engineering equipment, chemicals, steel products, powdered milk and electrical apparatus. While the commodity structure of Polish exports to Indonesia is quite stable, Polish purchases from Indonesia become more diversified every year. However, intermediary companies from other countries execute a considerable part of the trade transactions between Poland and Indonesia. Therefore, Polish entrepreneurs are interested in acquiring new trade partners in Indonesia and establishing more direct contacts with individual companies.

The number of inquiries regarding Indonesian export products received from Polish entrepreneurs, as well as the number of business visits to Indonesia is increasing every year. This is because Indonesia is an attractive market and the largest among Southeast Asian countries. Polish producers have a lot to offer and are looking for new opportunities to supply mining, electrical, agricultural and food processing equipment, machine tools, packaging machinery, power generation equipment, various kinds of chemicals including fertilizers, herbicides and insecticides as well as technology-all of which are in demand in Indonesia. Due to the comparative advantage of labor costs, we believe that the high quality of Polish products can still be offered at very competitive prices.

Many business and other opportunities have been made available by Polish companies to interested Indonesian partners, especially in areas such as the steel and shipbuilding industries (including construction of tankers, container ships, LPG and LNG ships, passenger ships, fishing boats, patrol and rescue boats), underground and open cast mining equipment, the chemical industry, the machine tool industry, building and construction machinery, food processing plants and environmental protection equipment and know-how.

Prospective purchases from Poland also include goods such as fertilizers, pharmaceuticals, processed food, measuring instruments, agricultural machinery, railway equipment and fire-fighting and rescue aircraft.

Therefore, Poland is expecting more visits from Indonesian companies to explore Poland's potential and search for business opportunities. Participation in international trade fairs and defense industry exhibitions organized in Poland, for example, provide opportunities for Indonesian entrepreneurs to present their products to potential buyers in Poland as well as to get acquainted with Polish export possibilities. The Indonesian Embassy in Warsaw organizes annual visits of Polish businesspeople to Indonesia to get acquainted with Indonesian export products, in particular to the annual Resource Indonesia Expo (PPE). During the 21st Indonesia Expo in Jakarta Aug. 11-15, 29 Polish entrepreneurs participated, with transactions amounting to almost $3 million. The Polish businesspeople bought furniture, handicraft and agricultural products among other items.

In order to facilitate the dissemination of information to Indonesian SMEs about market opportunities in Poland, the Indonesian Embassy in Warsaw has conducted market research on a number of selected sectors and commodities. This research includes a range of commodities, such as footwear, furniture, crude palm oil products, plywood, cocoa, coffee, spices, handicrafts, textiles and garments, natural rubber, tea, paper, seafood, fruit and nuts, and other articles, for further promotion of Indonesian SME export products in Poland.

In order to push further intensive economic cooperation between the two countries, a new Agreement of Economic Cooperation will be established, which will serve as a framework for a bilateral economic agenda and the legal basis for re-establishing the Joint Commission for Economic Cooperation. It is hoped that the agreement will be signed in the near future and that the sixth Session of the Joint Commission will be held in Warsaw in 2007.